What is Insurance?

Insurance is a financial arrangement in which an individual or organization pays premiums to an insurance company in exchange for protection against potential financial losses. The insurance company agrees to cover specified risks, such as damage, illness, liability, or loss, as outlined in the policy. For example, if you have car insurance and get into an accident, the insurance company may cover repair costs or medical expenses, depending on your policy terms. The goal of insurance is to provide financial security and peace of mind by reducing the impact of unforeseen events. Common types of insurance include health, life, auto, home, and business insurance.