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Texas County Mutual Insurance Co.
A century of Service to our Missouri friends and neighbors...
How insurance really works...
How ALL insurance works to some respect is as a "risk sharing" mechanism. You are in fact sharing the risk that something will happen
to you or your property with all of the other people who have insurance. Not just those with TCM, but everyone, everywhere.
How Insurance Works
The Perils
The Perils are those risks that a specific policy insures you against. No Policy insures you against ALL risks. Just as you don't expect
your Car insurance to pay for a house fire, Your house insurance does not insure against auto losses. The perils you are insured against
is clearly spelled out in every policy. It is your responsibility to work with an agent so that you can understand those things that you are
covered for, and those things which your policy does not cover.

It is your responsibility and that of your agent to know your exposure to risk, and either accept those risks yourself or buy insurance so
that you can share those risks with others.


The Amount of Loss
Once you have had a claim that is caused by a covered peril under your policy, a determination of the amount of loss must be
established. This determination then sets a dollar amount on the loss you have incurred. There are multiple ways this is determined but
today it is generally an automated program that uses a database of local costs for materials and labor to determine the cost to repair or
replace the damaged property. This amount is prepaired for and with you by the Claims Adjustor.
The Deductible
Once the Amount of loss has been determined then the risk sharing begins. The first part of the risk is generally paid for by you and is
called the deductible. What you pay premiums for is actually to compensate others for the amount of YOUR risk that you are asking
them to share. So your premiums pay other people to share your risk. Your deductible is the amount of your loss that you pay out of
your pocket. The higher the deductible(s) that you choose the more of your risk you are keeping and therefore the less you pay others
for the amount of your risk you are asking them to accept.
Every person is different even houses that look the same have different contents and individuals who live in them. Older house with
older roofs, People who pay their bills poorly, and people who have filed claims in the past are statistically a higher risk for you to
share risks with. Because of this most insurance companies, just like most banks loans are charged different rates based on the total
risk profile.

The best way to lower your total cost of insurance is to pay your bills on time and accept more risk via deductibles.
Different Prices
Insurance is Global
What we do as an insurance company is group your risk with other people so that we can "spread the risk" and also we take care of the
administration parts of the business, determining price, accepting or rejecting certain risks, billing payments, adjusting claims, and
paying losses and obtaining reinsurance.

Reinsurance is a policy or policies that are purchased by insurance companies. purchase to "share and spread the risk" against massive
claims from a Tornado or Hurricane that hits a specific area. So TCM buys insurance to help protect us so we can protect you. Our
deductible is just a lot larger. This reinsuring continues all the way to Lloyds of London or Bermuda where the reinsurance syndicates
actually attract capital or money to cover the largest catastrophic events.

So you see Insurance is truly global, what happens here affects prices other people pay and when events like hurricane Katrina hit it
ultimately costs us and you more for insurance. The risk is ultimately spread across every policy.
Insurance fraud and Ambulance chasers
What you are buying when you purchase insurance is peace of mind. Many people will never file a claim or get back all of the money
they paid in premiums. The benefit they receive for what they pay is the comfort that if it had been their house that burned they would
have been taken care of. A simple math excersise of taking the value of your Insurance policy coverage(s) and dividing it by your
premium amount. In many cases you would see that it might take 100 - 150 years to ever collect enough premium to pay for a total loss.

The way this works is that a few people will collect far more than they pay in because they were at risk of fire and the terrible event
happened. most of us know someone who this has happened too.

Some of the factors that is greatly affecting the cost of insurance for everyone today is fraud. More people today are over-extended and
the temptation to burn and run overcomes some people. Unfortunately there are also people who are professionals at taking advantage
of the system. This is fraud and it costs every policyholder more every year. We work diligently to avoid you sharing the risk with these
people.

The second major issue is the plaintiff attorneys. It used to be illegal for an attorney to advertise. Today they are some of the most
prolific advertisers out there. Turn over any phone directory and you are likely to see an advertisement for a plaintiffs attorney. These
advertisements costs Thousands of dollars a month to run. There are certainly circumstance where companies don't do the right thing,
but they are truly few and far between. The plaintiff attorneys make their living on forcing companies to pay out settlements on cases
without merit, because the cost of going to court and preparing for trial is so expensive. All of these costs get passed on to you in the
amounts of premiums we pay.
Insurance People are just people.
Most insurance people are good, honest, hardworking people just like you. They have kids, houses and mortgages. They pay the same
prices you do for their insurance.

The biggest problem in insurance is that few people take the time to truly understand what they are buying. Often the first
understanding of what they pruchased is in the middle of a claim, which is always a stressful event for everyone.

The easiest way to handle a stressful event like a claim is to just stay calm. If you paid your premiums and bought the right coverage
then you should be able to get through a claim with very little trouble. In almost every situation everyone involved is a human being
trying to do the right thing.