what is insurance??

auto insurance quote

what is insurance??

Insurance is a precaution against a possible unwanted outcome: in life and in business, it's a way of managing risk and keeping things on the move.
Insurance is the promise of reimbursement in the case of loss; paid to people or companies so concerned about hazards that they have made prepayments to an insurance company.
Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of as a guaranteed and known small loss to prevent a large, possibly devastating loss.
An insurer is a company selling the insurance; an insured or policyholder is the person or entity buying the insurance. The insurance rate is a factor used to determine the amount to be charged for a certain amount of insurance coverage, called the premium. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice.
We use insurance to protect against the possibility of loss, usually financial. When we buy insurance, we transfer our risk to someone else in exchange for a payment or premium. Then, if we suffer a loss, insurance puts us back into a position pre-claim (reinstatement).
It works because insurance companies group together a large number of people who all feel exposed to the same possible circumstances. The company knows that, in any one year, the total premium collected from the group of people should cover the cost of the claims made by the unfortunate few who actually suffer a loss.


In simple terms, insurance allows someone who suffers a loss or accident to be compensated for the effects of their misfortune. It lets you protect yourself against everyday risks to your health, home and financial situation.

Basically, insurance enables those who suffer a loss or accident to be compensated for the effects of their misfortune. The payments come from a fund of money contributed by all the holders of individual insurance policies. In other words, individual risks are pooled and shared, with each policyholder making a contribution to the common fund.