DEFINITION of 'Insurance'

A contract (policy) in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients' risks to make payments more affordable for the insured.


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When shopping around for an insurance policy, look for the best priced package that is right for you - prices can vary from one insurance company to the next. And make sure you know what you want. Some individuals, for example, prefer 24-hour claims service or face-to-face contact with an insurance representative. Also consider the claims settlement process, the amount of the deductible and the extent of the replacement coverage. Insurance companies and the policies they offer are not all the same, so think about more than just the price.

  1. Non-Scheduled Personal Property

    Refers to the items that are automatically covered under your ...
  2. Underinsurance

    Inadequate insurance coverage by the holder of a policy. In the ...
  3. Life Insurance

    A protection against the loss of income that would result if ...
  4. Whole Life Insurance Policy

    A life insurance contract with level premiums that has both an ...
  5. Premium

    1. The total cost of an option. 2. The difference between the ...
  6. Reinsurance

    The practice of insurers transferring portions of risk portfolios ...
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  1. Does renters insurance cover storage units?

    An all-perils renters insurance policy provides coverage for the contents of storage units. Most policies limit the amount ... Read Full Answer >>
  2. Can I get dental insurance with Medicare?

    Medicare does not offer dental insurance that will cover dental care and medical supplies, such as cleanings, sealants, extractions, ... Read Full Answer >>
  3. Can I get dental insurance with Obamacare?

    The Patient Protection and Affordable Care Act, also known as Obamacare, allows you to obtain dental coverage through the ... Read Full Answer >>
  4. Is homeowners' insurance required by law?

    While it is possible to legally own a home without a homeowners’ insurance policy, if the home is financed with a mortgage, ... Read Full Answer >>
  5. What is the difference between a peril and a hazard?

    The two related terms "peril" and "hazard" are often used in reference to the insurance industry. Essentially, a peril is ... Read Full Answer >>
  6. What kinds of costs are included in Free on Board (FOB) shipping?

    Free on board (FOB) shipping is a trade term published by the International Chamber of Commerce or ICC, that indicates which ... Read Full Answer >>
  7. How does life insurance help high net worth individuals protect their businesses ...

    Life insurance protects the businesses and personal wealth of high-net-worth individuals, or HNWI, by guaranteeing their ... Read Full Answer >>
  8. Why do some companies in the insurance sector engage in reinsurance?

    Some companies in the insurance sector engage in reinsurance because they want to reduce risk. Reinsurance is basically insurance ... Read Full Answer >>
  9. What is the difference between moral hazard and adverse selection?

    Adverse selection occurs when there's a lack of symmetric information prior to a deal between a buyer and a seller, whereas ... Read Full Answer >>
  10. What does the lapse ratio in the insurance sector measure?

    The lapse ratio measures the amount of insurance policy renewals with respect to the total number of insurance policies at ... Read Full Answer >>
  11. How might having insurance increase moral hazard?

    The Insurance Research Council (IRC) estimates that 12.6% of drivers currently on the road in 2014 did not have insurance, ... Read Full Answer >>
  12. What are activities of daily living (ADL)?

    Activities of daily living (ADL) refer to daily activities that individuals normally do, unassisted, to take care of themselves. ... Read Full Answer >>
  13. I know there is a form of deposit insurance where a portion of my bank account deposits ...

    First things first, it's only partially correct to think that a portion of your bank deposits is protected. The Federal Deposit ... Read Full Answer >>
  14. What is the difference between term and universal life insurance?

    Term life insurance is the most basic of insurance policies. It is nothing more than an insurance policy that provides protection ... Read Full Answer >>

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