Sunday, June 12, 2011

Car and auto insurance

Economic essence of car and auto insurance is to provide insurance protection. Insurance coverage can be explained as a two-sided reaction of mankind to the possible hazards of natural, technological, economic, social, ecological and other descent. On the one hand, the insurance coverage is called the objective need of individuals and corporate clients in preserving their property interests associated with different aspects of life. On the other hand, this need is accompanied by a corresponding ability of people to ensure these interests.

If the need for protection is generated by fear, and the ability to protect the knowledge because of this fear, the need for appropriate natural or monetary funds with which to ensure the safety of property, personal and other interests of the people, then we can say that will take effect the system of insurance protection.
Thus, insurance coverage can be defined as the perceived needs of individuals and entities in the creation of special insurance fund for the restoration of property, health, disability and personal income as the participants in the creation of these funds and third parties.
Social practices over a long period of time has developed three basic forms of car and auto insurance fund:
  1. Centralized insurance (reserve) funds created by budgetary and other public funds. The formation of these funds is carried out as in-kind and in cash. Public insurance (reserve) funds at the disposal of the government.
  2. Self as a system of creation and use of insurance funds, economic entities and individuals. These decentralized insurance funds are in-kind and cash. These funds are intended to overcome the temporary difficulties of a particular commodity or a human. The main source of decentralized insurance funds are proceeds of the enterprise or individual.
  3. Proper insurance as a system for creating and using the funds of insurance companies from premiums interested in insuring the parties. The use of these funds is carried out for compensation for consequential damages in accordance with the terms and conditions of insurance.
At present, substantially changes the relationship between the centralized and decentralized funds and specialized funds of car and auto insurance companies. Shift occurs in the direction of strengthening the role of insurance.
Thus, the economic essence of insurance is to create a cash fund by contributions from interested parties in the insurance, intended to redress the persons involved in the formation of these funds. Because the potential damage (or the insurance risk) is probabilistic in nature, there is a redistribution of the insurance fund in space and in time. We can say that reparations for victims is due to contributions from all those who participated in the formation of these insurance funds.

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