Insurance， in law and economics， is a form of risk management primarily used to hedge against the risk of potential financial Insurance is defined as the equitable transfer of the risk of a potential loss， from one entity to another， in exchange for a premium and duty of there are a few principles of insurance， which are considered as the uncertain losses， the predictable rate and distribution of losses，the sinificant of loss and the loss must be A property or liability insurance policy is a "personal contract，" a "conditional contract，" a "unilateral contract，" a "contract of adhesion，" a "contract of indemnity，" and a contract which requires that the person insured have an insurable interest at the time of the insured-against Further: An Insurance Contract is one of Uberrima This is a Latin phrase meaning "utmost good faith" (or translated literally， "most abundant faith") It is the name of a legal doctrine which governs insurance This means that all parties to an insurance contract must deal in good faith， making a full declaration of all material facts in the insurance This contrasts with the legal doctrine of caveat emptor (let the buyer beware) An entity seeking to transfer risk (an individual， corporation， or association of any type) becomes the 'insured' party once risk is assumed by an 'insurer'， the insuring party， by means of a contract， defined as an insurance 'policy' This legal contract sets out terms and conditions specifying the amount of coverage (compensation) to be rendered to the insured， by the insurer upon assumption of risk， in the event of a loss， and all the specific perils covered against (indemnified)， for the term of the When insured parties experience a loss for a specified peril， the coverage entitles the policyholder to make a 'claim' against the insurer for the amount of loss as specified by the policy The fee paid by the insured to the insurer for assuming the risk is called the 'premium' Insurance premiums from many clients are used to fund accounts set aside for later payment of claims—in theory for a relatively few claimants—and for overhead So long as an insurer maintains adequate funds set aside for anticipated losses， the remaining margin becomes their Insurers make money in two Through underwriting， the process through which insurers select what risks to insure and decide how much premium to charge for accepting those risks and by investing the premiums they have collected from insureds Some people consider insurance a type of wager (particularly as associated with moral hazard) that executes over the policy The insurance company bets that you or your property will not suffer a loss while you put money on the opposite The difference in the fees paid to the insurance company versus the amount for which they can be held liable if an accident happens is roughly analogous to the odds one might expect when betting on a racehorse (for example， 10 to 1) For this reason， a number of religious groups， including the Amish and some Muslim groups， avoid insurance and instead depend on support provided by their communities when disasters This can be thought of as "social insurance，" as the risk of any given person is assumed collectively by the community who will all bear the cost of In closed， supportive communities where others can be trusted to step in to rebuild lost property， this arrangement can Any risk that can be quantified probably has a type of insurance to protect Among the different types of insurance are: Automobile insurance， also known as auto insurance， car insurance and in the UK as motor insurance， is probably the most common form of insurance and may cover both legal liability claims against the driver and loss of or damage to the vehicle Over most of the United States purchasing an auto insurance policy is required to legally operate a motor vehicle on public Recommendations for which policy limits should be used are specified in a number of In some jurisdictions， bodily injury compensation for automobile accident victims has been changed to No Fault systems， which reduce or eliminate the ability to sue for compensation but provide automatic eligibility for Boiler insurance (also known as Boiler and Machinery insurance or Equipment Breakdown Insurance) Casualty insurance insures against accidents， not necessarily tied to any specific Credit insurance pays some or all of a loan back when certain things happen to the borrower such as unemployment， disability， or Financial loss insurance protects individuals and companies against various financial For example， a business might purchase cover to protect it from loss of sales if a fire in a factory prevented it from carrying out its business for a Insurance might also cover failure of a creditor to pay money it owes to the Fidelity bonds and surety bonds are included in this Health insurance covers medical bills incurred because of sickness or Liability insurance covers legal claims against the For example， a homeowner's insurance policy provides the insured with protection in the event of a claim brought by someone who slips and falls on the property， and brings a lawsuit for her Similarly， a doctor may purchase liability insurance to cover any legal claims against him if his negligence (carelessness) in treating a patient caused the patient injury and/or monetary The protection offered by a liability insurance policy is two-fold: a legal defense in the event of a lawsuit commenced against the policyholder， plus indemnification (payment on behalf of the insured) with respect to a settlement or court Life insurance provides a cash benefit to a decedent's family or other designated beneficiary， and may specifically provide for burial， funeral and other final Annuities provide a stream of payments and are generally classified as insurance because they are issued by insurance companies and regulated as Annuities and pensions that pay a benefit for life are sometimes regarded as insurance against the possibility that a retiree will outlive his or her financial In that sense， they are the complement of life Total permanent disability insurance insurance provides benefits when a person is permanently disabled and can no longer work in their profession， often taken as an adjunct to life Locked Funds Insurance is a little known hybrid insurance policy jointly issued by governments and It is used to protect public funds from tamper by unauthorised In special cases， a government may authorise its use in protecting semi-private funds which are liable to Terms of this type of insurance are usually very As such it is only used in extreme cases where maximum security of funds is Marine Insurance covers the loss or damage of goods at Marine insurance typically compensates the owner of merchandise for losses sustained from fire， shipwreck， ， but excludes losses that can be recovered from the Nuclear incident insurance — damages resulting from an incident involving radioactivive materials is generally arranged at the national (For the United States， see Price-Anderson Nuclear Industries Indemnity A) Environmental Liability Insurance protects the insured from bodily injury， property damage and cleanup costs as a result of the dispersal， release or escape of a Political risk insurance can be taken out by businesses with operations in countries in which there is a risk that revolution or other political conditions will result in a Professional Indemnity Insurance is normally a mandatory requirement for professional practitioners such as Architects， Lawyers， Doctors and Accountants to provide insurance cover against potential negligence Non licensed professionals may also purchase malpractice insurance， it is commonly called Errors and Omissions Insurance and covers a service provider for claims made against them that arise out of the performance of specified professional For instance， a web site designer can obtain E&O insurance to cover them for certain claims made by third parties that arise out of negligent performance of web site development Property insurance provides protection against risks to property， such as fire， theft or weather This includes specialized forms of insurance such as fire insurance， flood insurance， earthquake insurance， home insurance， inland marine insurance or boiler Terrorism insurance Title insurance provides a guarantee that title to real property is vested in the purchaser and/or mortgagee， free and clear of liens or It is usually issued in conjunction with a search of the public records done at the time of a real estate Travel insurance is an insurance cover taken by those who travel abroad， which covers certain losses such as medical expenses， lost of personal belongings， travel delay， personal Workers' compensation insurance replaces all or part of a worker's wages lost and accompanying medical expense incurred due to a job-related A single policy may cover risks in one or more of the above For example， car insurance would typically cover both property risk (covering the risk of theft or damage to the car) and liability risk (covering legal claims from say， causing an accident) A homeowner's insurance policy in the US typically includes property insurance covering damage to the home and the owner's belongings， liability insurance covering certain legal claims against the owner， and even a small amount of health insurance for medical expenses of guests who are injured on the owner's Potential sources of risk that may give rise to claims are known as "perils" Examples of perils might be fire， theft， earthquake， hurricane and many other potential An insurance policy will set out in details which perils are covered by the policy and which are Insurance companies may be classified as Life insurance companies， who sell life insurance， annuities and pensions Non-life or general insurance companies， who sell other types of In most countries， life and non-life insurers are subject to different regulations， tax and accounting The main reason for the distinction between the two types of company is that life business is very long term in nature — coverage for life assurance or a pension can cover risks over many By contrast， non-life insurance cover usually covers a shorter period， such as one
