What is insurance
Insurance is a form of risk management by which a company undertakes to provides a guarantee of compensation for specified loss such as damages, illness, accident, death, etc. the company takes these risks in return for the payment of a specified premium.
The company or person who provides insurance is known as the insurer and the person who buys insurance is known as the insured or policyholder. However, insurance is an agreement between insurers and the insured. The insurer is obliged to pay the committed amount of money if losses occur otherwise; the insured will not get any money.
Why is International trade insurance important??
It is really very important because it is an economical activity between the two countries. In international trade, insurance enables businesses to reduce risk by protects them from bankruptcy and instability. These reasons may take place in foreign trade.
There are several types of insurance that can protect companies from specific issues. However, we’ll discuss the importance of international trade below:
- Gives the organization financial stability:
It is very critical to protect a company from financial and organizational instability. Besides, any kind of accident may take place and lead to bankruptcy for the business and owner. Both parties need to aware of it. There are some forms of insurance that can protect companies. Have a look –
- Liability insurance: it’s aim is to protect companies from a specific risk
- General insurance: it’s aim is to protect a company from financial obligations
- Product insurance: its aim is to protect a company from an unsafe or faulty product.
- Errors and omissions insurance: its aim is to project from malpractice earnings against clinically rejected goods.
- Gives property insurance :
The common property insurance can project from damages of property like the company’s land, building, and pieces of machinery, etc. Besides, there is rental insurance who wants to rent their office space. However, insurance protects a business from the financial problem that happens if a fire breaks out
- Commercial auto insurance :
This insurance protects those businesses that use vehicles as a part o their operations. Such as delivery van, construction vehicles. It these get damage, insurance protects the business from liability.
- Employment-related insurance :
There is some organization who provides employee insurance facilities. If any employee gets sick, he/she is able to get health insurance facilities from the company.