We all have insurance for something whether it is for your home or your phone. But do you know how insurance works? Here we break down the definition and the process behind it.

The different types of insurance

Insurance is a legal binding contract between a policy holder and an insurer. It is there to protect someone financially if something wrong happens.

There are two key types of insurance: before the event (BTE) and after the event (ATE). At Alternative Insurance Brokers we deal with BTE insurance. These are policies that are taken out in the chance that something goes wrong. For example your phone insurance will pay out if you have to replace your phone due to damage, or your home insurance will pay out in the event of a flood.

Another big section of BTE insurance are warranties. These are primarily used for white goods around your home, or your car. They are there to protect you financially in case something happens such as your fridge breaking down, and it is a fault of the manufacturer.

ATE Insurance is used when something has happened and is going to court. It will cover you financially in the event that you lose a trial and you are liable to pay out.

Who is involved in an insurance policy?

There can be a few different people involved within the process of setting up an insurance policy.

The Insurer: These are the people who created and have underwritten the policy. This is who you’re in a legal contract with

The Broker: A broker collects all the relevant information from the client. They will then take this information and shop around with different insurers to get the best price and cover possible. They sometimes have special agreements set up with certain insurers that enables to get them better rate.

The Policy Holder: This is the client of the broker, the person who the insurance is for.

This is just a rough outline of people involved, and can vary depending on the policy. It can also go straight from the insurer to the policy holder in some cases.

How much is insurance?

The cost of insurance is dependent on a lot of different factors. Obviously the cost will be highly dependent on the type of policy you take out. For example car insurance will cost a lot more than pet insurance.
But there are also additional factors that will make a difference to any policy. This includes, your age, your location, whether you’re married or not, the business type (if for commercial insurance) and so on.

For many policies there are only quotes available after filling out a few questions. However for policies such as Impounded Car Insurance quotes online are very rare as they depend of so many different factors and are a lot more complicated to set up.

How Insurance Works Regarding Eligibility and Exclusions

With any policies there are general eligibility and exclusions that apply. These will all be laid out in the policy wording and key facts. Whether you are eligible for a policy is usually based on any pre-existing conditions that you know about that may conclude to a claim, any criminal convictions or any severe medical conditions. Again this will be very dependent on the policy that you are taking out.

This is only a brief overview of insurance as a whole. If you would like to know more then check out our other blogs below.

If you have any further questions about this, or any of your polices with us, then get in touch on 0161 495 600.