Copyright 2008 The Insurance Files
    Insurance policies provide billions of dollars each year to policyholders that file claims as a result of an accident, weather event, or illness. There is more than one interpretation of what defines insurance. One definition of insurance is as follows:

    "A promise of compensation for specific potential future losses in exchange for a periodic payment. Insurance is designed to protect the financial well-being of an individual, company or other entity in the case of unexpected loss. Some forms of insurance are required by law, others are optional. Agreeing to the terms of an insurance policy creates a contract between the insured and the insurer. In exchange for payments from the insured (premiums), the insurer agrees to pay the policyholder a sum of money upon the occurrence
of a specific event. In most cases, the policyholder pays a deductible, or part of the loss, and the insurer pays the rest."

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    The above definition provides a good explanation and overview of individual insurance. There are several types of insurance, including: health insurance, auto insurance, life insurance, boat insurance, flood insurance and hurricane insurance. Those are just a few types of insurance, there are plenty more. Buying insurance on your own, especially health insurance, can be very expensive. The next definition of insurance focuses on a more business perspective. The definition is as follows:

    "A system to make large financial losses more affordable by pooling the risks of many individuals and transferring them to an insurance company in return for a premium."

    The above definition is how most Americans get their health insurance. The prices for a policy drop significantly when the policies are purchased in bulk and dispersed to several individual people. Insurance can be defined in several more ways but as a general consensus, insurance saves people billions of dollars each year and allows millions of people to rest easy in knowing that their property, car, body, and family are protected by an insurance policy.