Insurance: Defined

Insurance is an agreement in which one party agrees to bear the risk of another party for compensation.
Insurance, generally, is an agreement in which one party agrees to share all or part of the risk of another party for compensation.  Statutorily, insurance is often defined as a contract where one party undertakes to indemnify another, or pay a specified amount, upon determinable contingencies.[1]

For example, a property insurance company may agree to bear the risk that a particular piece of property (e.g., a car or a house) may suffer a specific type or types of damage or loss during a certain period of time in exchange for a fee.  That agreement takes the form of an insurance policy, and the compensation is called the insurance premium.

Insurance is generally defined as a contract where one party undertakes to indemnify another or pay a specified amount upon determinable contingencies
Black's Law Dictionary defines "insurance" in part as a "contract whereby, for a stipulated consideration, one party undertakes to compensate the other for loss on a specified subject by specified perils."  An alternative definition from Black's Law Dictionary: "A contract whereby one undertakes to indemnify another against loss, damage, or liability arising from an unknown or contingent event and is applicable only to some contingency or act to occur in the future.[2]

Insurance is a method of providing protection against the risk from a conditional, uncertain event. Insurance involves pooling funds from a large group of different insureds to provide indemnification for any covered losses incurred by certain individual insureds.[3][4]

Insurance is not only a transaction by which the risk of loss or damage is transferred from one entity to another in exchange for payment, it is also the business or industry of providing such arrangements or contracts. Insurance is a commercial enterprise and a major part of the financial services industry, but individual entities can also self-insure through saving money for possible future losses.[3][4]

There are a number of different types, lines and classifications of insurance, including property insurance, casualty insurance, liability insurance, life insurance, health insurance, homeowners insurance, automobile insurance, aviation insurance, business insurance, workers compensation insurance and many more.[2]

[1]  See, for example: Louisiana Revised Statutes, 22:46(9)(a); West Virginia Code §33-44-3(f) Florida Statutes, §624.02; Code of Alabama, §27-1-2(1); Oklahoma Code, §36102; Delaware Code, Title 18, §102(2); Idaho Code, §41-102, et al.
[2]  Black's Law Dictionary; Sixth Edition; Insurance; p. 802.
[3]  To Insure or Not to Insure: An insurance Puzzle; Christian Gollier; The Geneva Papers on Risk and Insurance Theory.
[4]  Why Health Insurance; Robert Blumen; (2009).

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