What is Insurance? Definition and Meaning
Business is not free from risk of loss. So insurance is one of the devices by which risk may be reduced. Human life is exposed to many risks, which may result in heavy financial losses. Insurance is one of the devices by which risks may be reduced or eliminated and exchange for premium.
Insurance may be defined as
A contract between two parties whereby one party agrees to indemnify to loss suffered by other party for a consideration of some money called premium. The party which promises to indemnify the loss is called insurer, or insurance company. The person or the property subject to risk is called insured.
Insurance is a contract between two parties in which insurance company (one party) promises with that in case of any financial or life loss due to any reason, company will compensate the loss. The insured has to pay premium to insurance company in exchange for shifting of risk.
The specific amount for which policy is purchased from insurance company is called insured amount.
Definition by Chief justice Tindal
“Insurance is a contract in which a sum of money is paid by the assured in consideration of the sunsurance,s incurring the risk of paying larger upon a given contingency”