Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss.
An entity which provides insurance is known as an insurer, insurance company, insurance carrier or underwriter.
A person or entity who buys insurance is known as an insured or as a
policyholder. The insurance 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 the insured in the event of a covered loss. The loss may or may not be financial, but it must be reducible to financial terms, and usually involves something in which the insured has an insurable interest established by ownership, possession, or pre-existing relationship.
the insurer in exchange for the insurer's promise to compensate the insured in the event of a covered loss. The loss may or may not be financial, but it must be reducible to financial terms, and usually involves something in which the insured has an insurable interest established by ownership, possession, or pre-existing relationship.
The insured receives a contract, called the insurance policy,
which details the conditions and circumstances under which the insurer
will compensate the insured. The amount of money charged by the insurer
to the policyholder for the coverage set forth in the insurance policy
is called the premium. If the insured experiences a loss which is
potentially covered by the insurance policy, the insured submits a
claim to the insurer for processing by a claims adjuster. The insurer may hedge its own risk by taking out reinsurance,
whereby another insurance company agrees to carry some of the risks,
especially if the primary insurer deems the risk too large for it to
carry.
Credit
Credit insurance repays some or all of a loan when the borrower is insolvent.- Mortgage insurance insures the lender against default by the borrower. Mortgage insurance is a form of credit insurance, although the name "credit insurance" more often is used to refer to policies that cover other kinds of debt.
- Many credit cards offer payment protection plans which are a form of credit insurance.
- Trade credit insurance is business insurance over the accounts receivable of the insured. The policy pays the policy holder for covered accounts receivable if the debtor defaults on payment.
- Collateral protection insurance (CPI) insures property (primarily vehicles) held as collateral for loans made by lending institutions.
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