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Insurance, inlaw andeconomics, is a form ofrisk

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, and can be thought of a guaranteed small loss to
prevent
a large, possibly devastating loss. Aninsurer is a company
selling
the insurance. The insurance rate is a factor used to
determine the
amount, called thepremium, 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.
Contents
•

1 Principles of insurance
•

2 Indemnification
•

3 Insurers' business model

•

4 History of insurance
•

5 Types of insurance

o 5.1 Auto insurance

o 5.2 Home insurance

o 5.3 Health

o 5.4 Disability

o 5.5 Casualty

o 5.6 Life

o 5.7 Property

o 5.8 Liability

o 5.9 Credit

o 5.10 Other types

o 5.11 Insurance financing vehicles

o 5.12 Closed community self-insurance

•
6 Insurance companies

INSURANCE
•

7 Global insurance industry

•

8 Controversies

o 8.1 Insurance insulates too much

o 8.2 Complexity of insurance policy contracts

o 8.3 Redlining

o 8.4 Insurance patents

o 8.5 The insurance industry and rent seeking

o 8.6 Criticism of insurance companies

•

9 Glossary
•

10 See also
•

11 Notes
•

12 External links
FUNDAMENTAL PRINCIPLES OF INSURANCE

Some useful terms in Insurance:

INDEMNITY

A contract of insurance contained in a fire, marine, burglary

or any other
policy (excepting life assurance and personal accident and
sickness
insurance) is a contract of indemnity. This means that the
insured, in case
of loss against which the policy has been issued, shall be
paid the actual
amount of loss not exceeding the amount of the policy, i.e.
he shall be
fully indemnified. The object of every contract of insurance is
to place
the insured in the same financial position, as nearly as
possible, after the
loss, as if he loss had not taken place at all. It would be
against public
policy to allow an insured to make a profit out of his loss or
damage.
UTMOST GOOD FAITH

Since insurance shifts risk from one party to another, it is

essential that
there must be utmost good faith and mutual confidence
between the
insured and the insurer. In a contract of insurance the
insured knows
more about the subject matter of the contract than the
insurer.
Consequently, he is duty bound to disclose accurately all
material facts
and nothing should be withheld or concealed. Any fact is
material, which
goes to the root of the contract of insurance and has a
bearing on the risk
involved. It is only when the insurer knows the whole truth
that he is in a
position to judge (a) whether he should accept the risk and
(b) what
premium he should charge.
If that were so, the insured might be tempted to bring about
the event
insured against in order to get money.
· Insurable Interest - A contract of insurance effected without

insurable interest is void. It means that the insured must

have an actual
pecuniary interest and not a mere anxiety or sentimental
interest in the
subject matter of the insurance. The insured must be so
situated with
regard to the thing insured that he would have benefit by its
existence
and loss from its destruction. The owner of a ship run a risk
of losing his
ship, the charterer of the ship runs a risk of losing his freight
and the
owner of the cargo incurs the risk of losing his goods and
profit. So, all
these persons have something at stake and all of them have
insurable
interest. It is the existence of insurable interest in a contract
of insurance,
which distinguishes it from a mere watering agreement.
·
 proje
ct on insurance
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