What is insurance? Insurance is a contract between an
individual (the policyholder) and an insurance company. This contract provides
that the insurance company will cover some portion of a policyholder’s loss
as
long as the policyholder meets certain conditions stipulated in the insurance
contract. The policyholder pays a premium to obtain insurance coverage.
If the policyholder experiences a loss, such as a car accident or a house fire,
the policyholder files a claim for reimbursement with the insurance company.
The policyholder will pay a deductible to cover part of the loss, and the
insurance company will pay the rest.
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