In law and economics

 n law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the insurance; an insured or policyholder is the person or entity buying the insurance policy. The insurance rate is a factor used to determine the amount to be charged for a certain amount of insurance coverage, called the premium. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice.

The transaction involves the insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in exchange for the insurer’s promise to compensate (indemnify) the insured in the case of a large, possibly devastating loss. The insured receives a contract called the insurance policy which details the conditions and circumstances under which the insured will be compensated.

Contents

  • 1 Principles
    • 1.1 Insurability
    • 1.2 Legal
    • 1.3 Indemnification
  • 2 Effects
  • 3 Insurers’ business model
    • 3.1 Underwriting and investing
    • 3.2 Claims
  • 4 History of insurance
  • 5 Types of insurance
    • 5.1 Auto insurance
    • 5.2 Home insurance
    • 5.3 Health
    • 5.4 Accident, Sickness and Unemployment Insurance
    • 5.5 Casualty
    • 5.6 Life
    • 5.7 Property
    • 5.8 Liability
    • 5.9 Credit
    • 5.10 Other types
    • 5.11 Insurance financing vehicles
    • 5.12 Closed community self-insurance
  • 6 Insurance companies
  • 7 Global insurance industry
  • 8 Controversies
    • 8.1 Religious concerns
    • 8.2 Insurance insulates too much
    • 8.3 Complexity of insurance policy contracts
    • 8.4 Redlining
    • 8.5 Insurance patents
    • 8.6 The insurance industry and rent seeking

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