Insurance
Sunday, October 28, 2007 by dev
insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium. Insurer, in economics, is the company that sells the insurance. Insurance rate is a factor used to determine the amount, called the premium, to be charged for a certain amount of insurance coverage. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice.
An operational definition of insurance is that it is
* the benefit provided by a particular kind of indemnity contract, called an insurance policy;
* that is issued by one of several kinds of legal entities (stock insurance company, mutual insurance company, reciprocal, or Lloyd's syndicate, for example), any of which may be called an insurer;
* in which the insurer promises to pay on behalf of or to indemnify another party, called a policyholder or insured;
* that protects the insured against loss caused by those perils subject to the indemnity in exchange for consideration known as an insurance premium.
When is a policy really insurance?
An operational definition of insurance is that it is
* the benefit provided by a particular kind of indemnity contract, called an insurance policy;
* that is issued by one of several kinds of legal entities (stock insurance company, mutual insurance company, reciprocal, or Lloyd's syndicate, for example), any of which may be called an insurer;
* in which the insurer promises to pay on behalf of or to indemnify another party, called a policyholder or insured;
* that protects the insured against loss caused by those perils subject to the indemnity in exchange for consideration known as an insurance premium.
