What Is Insurance?

Insurance is a means of assurance from monetary misfortune. It is a form of risk management, primarily used to fence against the risk of a contingent or uncertain loss. The loss may or may not be financial, but it must be reducible to budgetary terms.

Insurance is a contract, represented by a policy, in which an individual or entity gets monetary assurance or repayment against any misfortunes from an entity known as an insurer, insurance company, insurance carrier or underwriter. A person or entity who buys insurance is known as an insured or as a policyholder.

The insured receives a contract, called the insurance policy, which details the conditions and circumstances under which the insurer will compensate the insured.

The amount of money charged by the insurer to the insured for the coverage set forth in the insurance policy is called the premium.

If the insured experiences a loss which is potentially covered by the insurance policy, the insured submits a claim to the insurer for processing by a claims adjuster.