What is risk?
Anything that cannot be predicted is risky. Risk means uncertainty. Insurance is a contract that helps you to shift the burden of injury caused by this uncertainty. Like while driving a car you have Third Party Insurance to cover any injury that you may cause to any vehicle or person on the road. As there is a level of uncertainty involved in driving a car and accidents may took place. There is a insurance policy to mitigate the risk.
What is a Contract of Insurance?
Insurance is a contract by which the Insurer agree's to pay a predetermined amount or any amount that is determined by method that is predetermined to the insured against the happening of an event against which the policy of insurance is taken, in exchange of a consideration we call Premium.
Insurer:- Person who is assuming the risk.and who is getting the premium.
Insured:- The person against whose lose insurer will pay money and who pays the premium
Insurance Amount:- The amount paid by insurer on happening of event.
Premium Amount:- The consideration of contract of insurance.
How Insurance Protect's You?
Insurance helps you to attain status quo. This means you are returned to the same position in which you where had the event does not take place. The money the insurance company pay to you can be diverted to reinstatement of the injury that is caused.
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