Premium

• The premium is the amount the consumer agrees to pay for coverage. The insurance company assesses the level of risk that the consumer presents when deciding how much to charge for coverage. The more likely the consumer is to make a claim against the policy, the higher the premium will be.
  
  

First Party Insurance

• A first party insurance policy provides protection to the consumer for damage caused to his or her home, business or other property. Examples of first party insurance include buying a homeowner's policy that will pay out if the property is vandalized, robbed or damaged by fire. Insurance coverage bought by a vehicle owner that pays for the cost of repairs to the owner's car if it is involved in an accident is an example of first party insurance coverage.
  
  

Third Party Insurance

• Third party insurance coverage protects a consumer from claims for injuries or damages made against him or her by another person who was injured or suffered a loss either on the consumer's property or because of the consumer's actions. Liability insurance, which pays for medical bills and expenses incurred by an injured person, is an example of third party insurance coverage.
  
  

Types of Coverage

• Insurance coverage can be put in place to replace income if the consumer dies (life insurance). In most states, having liability coverage in place to pay for injuries sustained by the occupants of the other vehicle is required by law. Vehicle owners can choose to buy coverage to pay for the cost of repairs to their own vehicle (collision and comprehensive insurance). Business owners can buy coverage to protect them from loss of income if their facility is shut down for a time.
  
  

Policy Exclusions

• No insurance policy is going to provide protection from every eventuality. A consumer should review the policy wording carefully to make sure that he or she understands exactly what events are covered, and which ones are excluded from coverage under the policy.