What is insurance?
Generally, it is a risk mitigation relationship
between an insured party and an insurer.
The insured party is the individual who is
They are mitigating the risk of suffering,
some sort of costs, damages, liability, etcetera,
based on a specific type of occurrence.
An insurer is the individual willing to or
accepting responsibility for indemnifying
or holding the insured harmless in the event
that a certain occurrence occurs.
So insurance comes back in any number of context
or situations but there are a couple of key
concepts that you need to understand there.
To start with, the concept of risk mitigation
and the purpose of insurance in that way,
and then the protected individual, the insured
and then the individual doing the protecting
that is the individual mitigating the risk
for the insured being the insurer.
Other than that, you need to understand the
value that is exchange there.
The insured will pay premiums to the insurer,
that is any form of value to the insurer in
exchange for that insurer promising to indemnify
or again, hold harmless or cover any costs,
damages, etcetera associated with a specific
type of occurrence.
And this is memorialized in an insurance contract
or an insurance policy.
Now, the key characteristics of that insurance
contract or policy are the potential risks
that are covered and the limits of coverage.
So the policy will identify a specific type
It can be the occurrence of any number of
types of events but it will specifically identify
a range of coverage of specific contingencies,
things that could arise at some point in the