Insurances are classified in a number of ways. The policy term and coverage differentiates one from the other. Risks, perils, losses, and property, are the different coverages. A detailed analysis and a deeper understanding of the characteristics should be made for a certain insurance policy to be classified.
Most of the time private and social assurance are distinguished from one another. Social insurance is offered by public agencies and it is mandatory. While there are a lot of coverages that are offered by the government that are considered compulsory. But the are also those that are voluntarily bought. Also, private insurance companies offer compulsory insurance. It doesn’t matter who the provider of the insurance is as the distinction between compulsory and voluntary insurance doesn’t depend on them. A compulsory insurance, who ever provides it, is considered as a social insurance.
Personal, property, and liability risks are the coverages included in a private voluntary insurance. Disability and medical care coverages are under personal insurance. The coverage for the cost of loss of a certain property, whether it be repair or replacement, or any loss due to the use of that certain property, is under property insurance. Fire, windstorm, riot, civil commotion, and crime, are the most common perils. Personal injury, bodily injury, and property damage caused by persons in their personal, professional, and business activities, are all included in a liability coverage. Further categories include surety bonding and credit insurance.
Governmental voluntary assurance focuses primarily on personal and property risks. In Wisconsin, voluntary insurances are provided for their residents. In another state, crop hail insurance under property coverage is also offered. The US government through the Veterans Administration, provides life insurance to veterans. People who have already retired are also given supplemental medical care insurance on a voluntary basis under the Medicare program through the Social Security Administration. In the case of home loans, the federal housing administration provides loans to its lenders. The US government also joined the marine insurance field during the time of world wars.
Compulsory insurance is further sub-classed into two kinds, either state or federal. Some of these programs are supported by insurers while others are financed by government agencies. Coverage is provided for personal, property, and liability risks.