Essay # Meaning of Insurance:
Meaning of Insurance: Life involves risk and uncertainty. The speed at which life is moving has led to an increase in these risks and uncertainties. Man may pass away suddenly. He could experience an accident, lose property to a fire, flood, earthquake, or other disaster. Risk and insecurity both exist whenever there is uncertainty.
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Insurance was created to protect against risk and instability. The pooling of risks is the core tenet of insurance. It is a cooperative tool to distribute the loss brought on by an insured risk among a broad group of people who are also exposed to that risk and have insurance to protect themselves from it.
Insurance, in the words of W.A. Dinsale, is “a device for the transfer of risks of individual entities to an insurer, who agrees, for a price (called the premium), to accept, to a predetermined amount, losses sustained by the insured.”
Insurance is a social tool for lowering risk, according to Mehr and Cammack, by pooling enough exposure units to make their individual losses predictable as a whole. Then, everyone involved in the combination shares the predictable loss fairly.
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So says D.S. Hansell. Insurance is a social tool that compensates people financially for the effects of misfortune. Payments are provided from the total amount of contributions made by all participants in the programme.
In its technical sense, insurance is a social tool that uses the pooling strategy to remove uncertainty, claim Schultz and Bradwill.
Justice Tindal stated that “insurance is a contract in which a sum of money is paid by the assured in consideration of insurers incurring the risk of paying a significant sum upon a specific contingency.”
It is known as an insurer or insurance firm when a corporation assists in engaging into such an agreement. The term “insured” or “assured” refers to the individual who obtains life or property insurance. Policy is a name for a written agreement or contract. The thing on the insured piece of property is referred to as the subject-matter of insurance, and the assured’s stake in the subject-matter is referred to as his insurable interest.
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To sum up, an insurance contract is a legal agreement that commits one party, in exchange for payment, to cover another party’s losses resulting from a certain risk, such as fire, or to recompense them or their estate in the case of a specific occurrence, such as an accident or death.