Optional and mandatory insurance
In life, we often face challenges and risks that are almost impossible to foresee and manage. Unexpected health problems, car accidents, or financial losses caused by natural disasters. It is in such stressful life situations that the importance of insurance is highlighted - a financial tool that helps us manage risks and reduce unexpected expenses.
The world of insurance is diverse and is divided into two big fundamentally different concepts - mandatory and voluntary insurance. In some cases, insurance is a legal obligation, and in other cases, it is a matter of personal choice and responsibility. What distinguishes these two directions from each other? How do they affect our financial well-being and the social security of society? In response to these questions, we will consider each of them in more detail.
Compulsory insurance
Compulsory insurance is an obligation established by the state. . It is a form of insurance provided by law to protect against specific risks and is mandatory for certain categories of citizens and business entities. The purpose of mandatory insurance is to protect citizens from unexpected threats and increase social responsibility.
Areas in which compulsory insurance is used
Compulsory insurance is found in areas where there is a high risk of potential harm. One of the most common examples is compulsory auto insurance, which obliges car owners to insure their liability to third parties. Compulsory insurance is found relatively often in areas where damages are high in case of professional liability violations (eg for doctors, lawyers), employer's liability insurance and others.
Compulsory insurance in Georgia
There are several types of compulsory insurance in Georgia. Starting from 2018, it is mandatory to insure a vehicle registered in a foreign country moving in Georgia. This means that the insurance company provides compensation for the damage to the injured party in the event of a traffic accident. In addition, from 2019, it is mandatory to insure employees who perform work involving increased risk, and the employer is obliged to purchase an appropriate insurance package.
In addition, the state implements a universal healthcare program, within the framework of which a large part of the population is provided with mandatory medical insurance.
Voluntary insurance
Voluntary insurance is a type of insurance that a natural or legal person acquires on their own initiative and desire. The conditions and validity period of voluntary insurance are determined by the agreement signed between the insured and the insurer. This type of insurance is a financial instrument that protects the insured from various risks and unexpected expenses
Areas in which voluntary insurance is used
The scope of voluntary insurance is quite wide. For example, auto insurance provides compensation for the costs of a damaged car, while property insurance covers immovable and movable property against various unforeseen risks - fire, flood, theft, etc. - Insures. There is also life insurance, which involves payment of compensation to the heirs of the insured in case of his death. Finally, most companies offer travel insurance to customers. The latter covers such travel risks as illness, loss of luggage, flight cancellation and others.
Optional insurance in Georgia
Unlike mandatory insurance, voluntary insurance is a well-established practice in Georgia. Citizens can purchase health, life, accident, property, automobile and other types of insurance individually or through an employer. Demand for voluntary health insurance has increased in recent years due to increased public awareness and limited services of public health programs. Also, travel insurance is popular, the demand for which increased especially during the pandemic, when moving between countries was associated with additional risks.
Common benefits that compulsory or voluntary insurance brings
Regardless of whether insurance is mandatory or voluntary, it still serves one purpose - to protect people. Compulsory insurances, such as health and car insurance, ensure an increase in the level of general protection for the broad sections of society and contribute to the maintenance of social stability. Voluntary insurances reduce individuals' personal risks and allow individuals to choose insurance packages tailored to their needs and financial capabilities. In both cases, insurance is an effective risk management tool that protects people from unexpected financial losses and offers the prospect of a peaceful future.
Life is full of surprises, but we have a handy weapon to protect ourselves from them in the form of insurance. Compulsory and voluntary insurances together form a solid foundation of stability and security, on which rests the peace and well-being of each of us and the entire society.
