Insurance is the equitable transfer of the risk of a loss,
from one entity to another in exchange for payment. It is a form of risk
management primarily used to hedge against the risk of a contingent, uncertain
loss.
An insurer, or insurance carrier, is a company selling the
insurance; the insured, or policyholder,
is the person or entity buying the insurance policy. The amount to be charged
for a certain amount of insurance coverage is called the premium. Risk
management, the practice of appraising and controlling risk, has evolved as
a discrete field of study and practice.
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.
For further info on insurance: http://en.wikipedia.org/wiki/Insurance
