risk

Home Insurance Companies

Home insurance companies can help you reduce or alleviate the risk of losing your home for various reasons (accidents, etc.). If you are having your own home, it is highly recommended to insure it against accidents and other unfortunate events.

Having insurance, we protect our wealth against potential significant monetary losses.

The best home insurance companies feature the following points:

Price – The prices that they offer should be such that most a large population can get their homes insured.
Claims – The companies should be prompt in taking the applications of claims and give out the claims of the insurers as soon as possible. This is one of the biggest factors which people consider while choosing a home insurance company.
Coverage – This is basically related to the areas which the company will cover for providing the money after an accident.
Based on these criteria we present to you some of the best home insurance companies in the US:
1. Amica Mutual- This is the best ranked company for the year 2015. The company is one of the best in the customer service ratings and affordability ratings. People can afford the monthly payments needed to give for taking a home insurance from this company. It is the oldest mutual insurer and gives a 24*7 service to its customers.
2. Erie Insurance – This is also among the best rating companies in the country. It has been providing its services since 1925 and has one of the best ratings for customer satisfaction and affordability. Its services are available in 12 states and the District of Columbia.
3. American Family- This Company is not far behind than the others and has above average customer satisfaction rating and agent satisfaction ratings. This company has its reach in 19 states.
4. Federated National- This Company strives to provide fair and competitive prices and their customer satisfaction ratings are also very high. They specialize in home insurance from their range of insurance services.
5. State farm- This Company has a high affordability rate but the coverage that they offer is average. The mission of this company is to be a ‘Good Neighbor’ and involves itself in in community involvement and disaster response also.

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How does exchange rate affect businesses?

by Kylee Sanders

Financial terms are not easy for everyone to understand. Only those who are adept in the field are the ones who truly understand the meaning of each field. Unless you are some sort of a CA or an economist, you would not know what exchange rate actually means.

Nowadays, international trade is pretty common, and paying and accepting foreign currency is nothing new. Thus, businesses working with foreign companies are at risk as the exchange rate can change at any point (and not necessarily in a way favorable to the company). It is a myth that individual operators and SMEs do not get affected owing to the exchange rate. It affects them as much as it does MNCs. It is also a myth that those businesses not operating at a global level do not get affected. A fluctuation in the exchange rate affects the economy as a whole and there is no escaping it.

How does exchange rate affect businesses?

Business owners and investors receive the hardest hit due to fluctuation in exchange rates

However, it is absolutely true that business owners and investors receive the hardest hit due to fluctuation in exchange rates. From small businesses to sprawling giants, from small investments to millions of dollars, everyone gets affected because of a fall or a rise in the exchange rate.

The economics of the world itself changes when there is a change in the currency value. Business operations are far more vulnerable to these volatilities than anything else. The 3 business areas that are the source of the risk are:

Transaction risks
Translation risks
Economic risks

Transactions bear a risk if a business owner is supposed to pay in foreign currency and the rate has suddenly shot up. This loss can easily be recovered in a short time. Thus, this cannot be deemed as a long term loss and businesses cannot collapse solely on this basis. Only in rare cases will a business totally collapse because of a change in the currency value.

Translations fall into risky positions when there are branches spread out across the globe. A change in the currency value will definitely cause a change in the overall final balance sheet of the company.

Economic risks concerns the situation where the market value is affected by sudden exchange rate fluctuations.

Image credit: i.telegraph.co.uk

Exchange Rate Risk

by Ryan Kendall

Also known as ‘currency risk’, exchange rate risk is the possibility of a business’s operation or an investment value being affected by the change in exchange rate. As this is the era of globalization, there is an increasing amount of mobility of currencies between countries. Due to the heightened volatility of currency, the fluctuations in the exchange rates has a great impact on planning of companies’ operations as well as influence on profitability in different ventures.

The exchange rate does not only affect the big companies that are involved in multinational operations. They also have effect on the small and medium enterprises that do not operate outside their home countries. While full understanding of exchange rate risk is obviously crucial for multinational corporations and SMEs, it is also important for investors to be properly familiar with currency risk as; exchange rate risk impacts their investments as well.

How does it work?

Exchange rate is the value of one nation’s currency as compared to the value of a foreign currency. While calculating the exchange rate, the domestic currency and the foreign currency are quoted directly or indirectly in order to measure the exchange rate. Therefore any company or investors holding bonds that make interest and principal payment in a counter currency (foreign) may lose substantial amount of money for reasons that are irrelevant to the issuer’s ability to pay.

Why does the exchange rate risk matter?

One of the most important reasons for finding the exchange rate risk is because at the end, the currency risk affects the cash the investor’s is going to get in the end. This determines the investor’s money’s final rate of return. Exchange rate risk can also create new openings as the interest rates that between two countries which will reflect the possible fluctuations in the exchange rates between them.

What are the types of exchange rate risk?

Business can be exposed to three types of exchange risk rate, that is:

Transaction exposure – caused by the effect of currency risk changes have on business’ commitment to make or receive payments that are denominated by counter currency.
Translation exposure – caused by currency fluctuations’ effect on the organization’s consolidated financial statements.
Economic exposure – caused by the unexpected change of exchange rate risks which may affect the company’s market value and future cash flows.

Image credit: i.telegraph.co.uk/