Definition: The word "insurance" has a very broad meaning, but it most commonly refers to protection or financial security through insurance policies. An example of an insurance policy is a homeowners or car insurance policy that covers the damage caused by natural disasters like hurricanes, floods, earthquakes, and storms. It can also cover medical expenses in case of injuries or illnesses sustained during the course of your life. When it comes to borrowing from an insurance company, you would typically have a specific amount of money in your account that you are required to contribute towards a claim. This amount is usually called "premium" or "deposit", and it helps the insurer cover some of the costs associated with a claim. The terms used to describe this process include "self-insurance" or "deductible," which simply means that you are responsible for paying a portion of the cost of your insurance claims. For example, if you have a policy that covers only 10% of the total cost of a claim, and you make a claim worth $500, then the insurer would cover only $400. In summary, insurance is protection from risks or losses in exchange for a fee (premium). It can be self-insured if there are no known claims, or it can be deducted from your insurance premium if you have certain circumstances that affect your risk of claims.
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