INSURANCE

In law and business, contractual arrangement that provides for compensation by an insurer to an insured party if or when a specified set of circumstances occurs. Such circumstances may include death or personal injury, accident, unemployment or old age, loss of or damage to property, or any one of a number of instances that can be compensated for financially. The insurer conducts its operations by amassing relatively small contributions from many people who are exposed to the risk of occurrence of an unforeseen event in order to create a fund that is used to reimburse those insured who actually suffer from such an occurrence. The contributions of the policyholders are called premiums. A contract of insurance is embodied in a policy that specifies the terms under which the insurer agrees to indemnify the policyholder for loss in consideration of the payment of a stated premium or premiums.