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Think You Know Something About Insurance Companies?

If asked what an insurance company does, most people would only be able to give a simple answer

. They would say that an insurance company is a company that sells insurance. While this is correct, an insurance company does sell insurance, it is too simple of an answer.

Insurance has a long history dating back to over 5000 years ago and insurance companies have developed into specialized companies that sell different kinds of insurance. Which is why to answer the question of what an insurance company does with such a simple answer does not fully explain what they are.

The History Of The Insurance Company

The first record that we have of insurance is from 3000 B.C. in China. The Chinese used the act of insurance to protect their goods as they were transported over the sea from the seller to the buyer. The insurance protected both parties from the possibility of the goods being destroyed or stolen while in transit.

This form of insurance developed through the centuries and is still in use today by companies around the word. As the idea of insurance was handed down from one generation to another it grew. Each new established civilization modernized it and changed it to where it has expanded to other areas as well.

Today we now have insurance for almost anything of value that we own and even to protect ourselves physically. Insurance policies now include protection for: autos, homes, renter's property, health, life, dental, disability and specific products purchased in stores (electronics and big ticket items).

Out of all of the insurance available today through an insurance company, auto insurance is the most frequently bought. Even though insurance started around 3000 B.C., the first auto policy wasn't sold until 1897 A.D. in Dayton, Ohio. The insurance company that has the honor of being the first to sell auto insurance was Travelers Insurance Company.

Auto insurance at that time was still purchased voluntarily by vehicle owners that wanted to protect their vehicles and themselves in the case of a car accident. The start of mandatory car insurance wasn't until 1927, when Massachusetts became the first state to require that drivers carry auto insurance.

The rest of the states followed Massachusetts' example over the following years until it is now mandatory in all states to carry car insurance to drive.

Insurance Company Products

To say that an insurance company just sells insurance is like trying to stuff the whole alphabet into one letter. An insurance company does sell insurance, but they sell insurance for at least 8 different well known fields (auto, home, renters, health, life, dental, disability and specific large ticket products).

Each of these different fields provides insurance protection for different areas of our lives. All of them also have different rules and regulations that the insurance company has to abide by. They all have different policy coverages, forms and contract wording as well.

The differences between each of the different fields of insurance and their policies doesn't end between fields either. Within the same field of insurance there are different insurance coverages, limits available and premiums that are charged.

Here is a list of some of the products that just car insurance companies sell to protect you in the event of an accident:

Collision Coverage, Comprehensive Coverage, GAP Coverage, Medical Payments, Bodily Injury Liability, Towing Coverage, Rental Car Coverage, Bodily Injury Coverage and Property Damage Liability Coverage.

The Heart Of An Insurance Company

First and foremost insurance companies sell a promise. A promise that they will provide financial protection for the item that you purchased a policy on from them. Without this promise there is actually no insurance.

If an insurance company sells insurance and does not keep this promise they will lose business from their customers. Without clients and their client's money an insurance company goes out of business. If they don't go out of business and an insurance company fails to pay out on valid insurance claims the insurance commissioner of the state where the issue is can place fines or worse on an insurance company.

Yes, an insurance company sells insurance, but as you can see there is much more to it than that.

by: Todd Clay


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