What is insurance

1. Presented BY
ASIM NAZIR
Deputy Manager
Asia Insurance Company Limited

3. “Promise of reimbursement in case of loss;
paid to people or companies so concerned
about hazards that they have made
prepayments to an insurance company”.
A more technical definition can be
“Insurance is a financial arrangement
whereby losses suffered by a few are met
from the funds accumulated through small
contributions made by many whom are
exposed to similar risks”.

5. An insurance policy is a legally binding contract between an insurance
company and the person who buys the policy, commonly called the
"policyholder", who also is often the person insured.
In exchange for payment of a specified sum of money, called the
"premium," the insurance company agrees to pay for certain types of loss
or damage as specified by the contract. When a loss occurs which meets
all of the requirements described by the terms of an insurance policy, the
loss is said to be "covered" by that policy. The term insurance policy
refers specifically to the written contract. You probably have other
documents that may or may not offer you additional rights, including your
application, any correspondence from the insurer, summary plan
descriptions (for disability and medical insurance), and your declarations
page (often shortened to “dec” page).

7. Insurance policies offer protection against economic loss, that is, loss or
damage which can be measured in purely financial terms and
compensated by money. For example, an insurance policy can pay for the
cost to repair or replace a damaged automobile or to rebuild a building
damaged by fire, for the cost of medical treatment for an injury or illness
or for the lost income of a person who dies or is unable to work. The
purpose is to place the injured party, as nearly as possible, in the same
financial position as if the loss had not occurred.
It is important to understand this limitation of insurance, since there are
many types of losses which can not be compensated by money. For
example, insurance can not replace a life or take away the emotional
injury or pain which often accompanies an accident or serious illness or
compensate for loss of the "sentimental" value of an item of property.
When you buy homeowners property insurance, for example, you are
insuring only the economic value of the home, i.e., the cost to repair or
rebuild it.