Insurance

An insurance policy is a method of protecting you from financial loss. Basically, it is a type of risk management that is mainly used to protect against the possibility of a future or uncertain loss.

An entity that offers insurance is referred to as an insurer, an insurance business, an insurance carrier, or an underwriter, depending on its location in the world. An insured, also known as a policyholder, is a person or organisation who purchases insurance coverage. It is the insured's responsibility to pay the insurer in return for the insurer's commitment to reimburse him in the case of a covered loss, which is a guaranteed and known (but relatively modest) loss on his part. The loss may or may not be financial in nature, but it must be reducible to monetary terms. It usually involves something in which the insured has an insurable interest established by ownership, possession, or a pre-existing relationship, and it must be reducible to financial terms.

When an insured person purchases insurance, they are given a document known as an insurance policy, which specifies the terms and circumstances under which an insurer would pay the insured person. Generally speaking, the premium is the amount of amount charged by an insurer to a policyholder in exchange for the coverage specified in the insurance policy. If the insured suffers a loss that may be covered by the insurance contract, the policyholder must file a claim with the insurer, which is then processed by a claims adjuster. A deductible is a necessary out-of-pocket expenditure needed by an insurance policy before an insurer would pay a claim to cover the cost of the claim (or if required by a health insurance policy, a copayment). In order to mitigate its own risk, the insurer may choose to purchase reinsurance, in which case another insurance company agrees to assume some of the risks, particularly if the main insurer determines that the risk is too high for it to bear.