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Insurance
Insurance Directory
- Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss.
- Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment.
- An insurer is a company selling the insurance; an insured, or policyholder, is the person or entity buying the insurance policy.
- The insurance rate is a factor used to determine the amount to be charged for a certain amount of insurance coverage, called the premium.
- The transaction involves the insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in exchange for the insurer's promise to compensate (indemnify) the insured in the case of a financial (personal) loss.
- The insured receives a contract, called the insurance policy, which details the conditions and circumstances under which the insured will be financially compensated.
- Insurance involves pooling funds from many insured entities (known as exposures) to pay for the losses that some may incur. The insured entities are therefore protected from risk for a fee, with the fee being dependent upon the frequency and severity of the event occurring.
- In order to be insurable, the risk insured against must meet certain characteristics in order to be an insurable risk.
Source: Wikipedia
