Definition of Insurance and Insurance Policy

Insurance: The term insurance defines any step or measure taken for security against risks. In general ‘step’ or ‘measure’ refers to a certain amount of money or full recovery from the danger based upon the certain regulations according to the mutual agreement between the insured and the insurer.

There are various insurances for various fields of risk. As insurance is a system of allotment of risk among the involved persons, the financial risks covers almost every part of human life and their property. from different kinds of insurances, life insurance, fire insurance, marine insurance are the top leading category. There are some other insurances too such as car insurance, crop insurance, personal accident insurance, health insurance and so on.

Insurance Contract: The mutual agreement is called the contract on which the insurer ensures the insured to help him/her in order to recover from the loss. An agreement whereby, for definite respect, one party agrees to pay the other for a loss involving a specific matter as an outcome of the amount of chosen risks.
Insurance is the subject that deals with the step prior to the hazard. Insurance doesn’t cause to stop the accident or danger but it can help the insured to recover from it economically. It certainly helps the insured to recover the loss financially or instrumentally. In insurance market the insurance companies or the authority forms different policies for different issues.

Insurance Policy: Policy is the basement of the contract. The contract or agreement is signed upon the policy where the losses are listed that is to be compensated by the insurer or the insurance company. The insured or the policy holder pays an exact amount of money to buy the policy and when the policy holder suffers from a list that is listed on the policy, then the insurer or insurance company compensates.

Insurance is tough business in which different things are needed to be calculated. It is not a new conception. In this hazardous world it is really good to be insured. The insurer and insurance taker must follow some general principles of insurance such as insurable interest, utmost faith etc.