What does an insurance policy do?
Insurance policy. In insurance, the insurance policy is a contract (generally a standard form contract) between the insurer and the insured, known as the policyholder, which determines the claims which the insurer is legally required to pay. … with both parties’ consent, are part of the written policy“.
What is the purpose of insurance?
Insurance is a contract in which an insurer promises to pay the insured party a sum of money if one or more specified events occur in the future, in return for regular small payments – known as premiums. The purpose of insurance is to reduce your business’ exposure to the effects of particular risks.
What is insurance risk?
A probability or threat of damage, injury, liability, loss, or any other negative occurrence that is caused by external or internal vulnerabilities, and that may be avoided through preemptive action. 2. Finance: The probability that an actual return on an investment will be lower than the expected return.