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Insurance can be defined as an equitable transfer of any loss from an entity to other entities and individuals in exchange for money. Insurance comes under risk management, it is mainly used to hedge against any accidental loss. The person or company that does insurance can be referred as insurer or insurance carrier and the person or entity that avails insurance can be called as insured or policyholder. An insurance company charges an amount of money for a certain sum of insurance coverage, that sum is called as premium. The contract between an insurer and insured involves the insured assuming a guaranteed and relatively small loss in the form of payment that the policyholder pays to insurer. In exchange, insurer promises to pay compensation if insured suffers any financial or personal loss. This contract is called insurance policy, and it has terms and conditions given in it under that a policy holder can get compensated.
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