Most individuals have some type of insurance, whether it’s life, home, or auto insurance. However, most of us rarely stop to think about what insurance is or how it works.
In short, insurance is a contract symbolized by a policy, based on which the policyholder receives a financial guarantee or compensation for losses from the insurance company. To make payments to the insured more manageable, the company pools the risks of its clients.
Insurance policies are intended to protect against the possibility of large and small monetary losses that may be caused by damage to the insured or his property or liability for damage or injury caused to a third party.
