Insurance

Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management primarily used to hedge against a contingent or uncertain loss risk. An insurance entity is an insurer, insurance company, insurance carrier, or underwriter. A person or entity who buys insurance is known as a policyholder, while a person or entity covered under the policy is called an insured. The insured receives a contract called the insurance policy, which details the conditions and circumstances under which the insurer will compensate the insured, their designated beneficiary, or assignee. The amount of money charged by the insurer to the policyholder for the coverage outlined in the insurance policy is called the premium. If the insured experiences a loss that is potentially covered by the insurance policy, the insured submits a claim to the insurer for processing by a claims adjuster. A mandatory out-of-pocket expense required by an insurance policy before an insurer will pay a claim is called a deductible. The insurer may hedge its own risk by taking out reinsurance, whereby another insurance company agrees to carry some of the risks, especially if the primary insurer deems the risk too large for it to carry [Wikipedia].
Insurance is a contract, represented by a policy, in which a policyholder receives financial protection or reimbursement against losses from an insurance company. The company pools clients’ risks to make payments more affordable for the insured. Insurance policies are used to hedge against the risk of big and small financial losses that may result from damage to the insured or their property or liability for damage or injury caused to a third party. There are many types of insurance policies. Life, health, homeowners, and auto are the most common forms of insurance. Businesses require special insurance policies that insure against specific risks faced by a particular business. For example, a fast-food restaurant needs a policy that covers damage or injury resulting from cooking with a deep fryer. An auto dealer is not subject to this type of risk but does require coverage for damage or injury that could occur during test drives. Insurance is a way to manage your risk. When you buy insurance, you purchase protection against unexpected financial losses. The insurance company pays you or someone you choose if something bad happens to you. If you have no insurance and an accident happens, you may be responsible for all related costs [Investopedia].

Sources:

Insurance: Definition, How It Works, and Main Types of Policies. Investopedia. Retrieved from: https://www.investopedia.com/terms/i/insurance.asp

Insurance. Wikipedia. Retrieved from: https://en.wikipedia.org/wiki/Insurance