The seven Principles of insurance state the different groups that are insurable. They are classified both for the sake of organization, and so that insurance companies can decide which area of expertise they would like to specialize in as an organization.

The first of the Principles of insurance is dealing with a large amount of the same type of policy. This is commonly thought of in auto insurance. Over a hundred million drivers in the United States alone carry auto insurance, and they do so because the companies have discovered the way to balance the risk with the proper funds.

Five of the seven principles involve loss categories. Definite loss deals with loss that is a guarantee, such as life insurance. Accidental loss would be associated with renter’s or fire insurance. There is not a guarantee of theft or fire, so each individual case is evaluated before coverage is assigned. Large loss deals with coverages of items that are of great value to the buyer. Great care must be placed in these policies, as the amount of capital needed to replenish these losses may be great.

The fifth loss principle deals with limiting the amount of loss from a catastrophe, such as an act of God. Acts of God include floods, hurricanes, and many other meteorological events. The insurance company takes care to write into the policy that a total amount of capital can be distributed based on the number of policy holders affected. For instance, if a thousand people with the same coverage are hit by a tornado, the company can limit their risk through this principle.

The final principle is the affordable premium. A balance must be struck between the client and the company as to what is a sensible amount to pay for the term of the policy. This is crucial to the success of the company, and is assessed at the outlook of the policy.

These Principles of insurance are the foundation of a healthy insurance group. Using them is the key to offering smart insurance and making a sensible profit.

By: Phil Sims

The AARP homeowners insurance program is provided by The Hartford Financial Services Group. The Hartford Financial Services Group was founded in 1810 and has had a partnership with the AARP providing auto insurance and homeowners insurance since 1984. This partnership is currently in its third extension and will continue through at least January 2020.

The AARP homeowners insurance program offers some good benefits. They have a 100% protection plan available which insures your home for 100% of its replacement cost. According to their website, if this option is selected they will “pay the full cost to rebuild even if it costs up to 150% of the applicable limits of your policy.”

Another good benefit that they offer is their “Protector Plus Homeowners Deductible Forgiveness”. With this benefit they will wave up to $5,000 of your deductible if you experience a qualifying loss of $20,000 or more.

For the protection of your personal possessions they have what they call a “new for old” plan in which they pay the actual cost to replace possessions with brand-new items. This is a good option to have because if your possessions are several years old the cash value would be far less than that of brand new items.

One thing that I don’t really like too much about their coverage is that personal property is only covered up to $5,000. You can get more coverage than that if he needed but of course you have to pay extra. And let’s face it if your house burned to the ground and you needed to replace all of your possessions, things like your furniture, appliances, electronics, etc. it would probably cost far more than $5,000 to replace all of those items.

All in all the AARP Homeowners Insurance Program looks pretty good to me but I always recommend doing your homework and talking to trusted financial professionals before committing to any important financial decisions.




By: Stan Jenkins