Insurance is defined as a promise to provide compensation for potential future losses in exchange for periodic payments. There are different types of deductibles such as fixed amounts or percentages of total loss. The history of insurance dates back centuries to ancient Babylon and Rome, with the modern insurance industry developing in Europe in the 1000s AD and expanding in the US in the 1900s. Insurance provides benefits such as distributing losses equitably and protecting policyholders, but also has limitations like unavailability in high-risk areas.

1. Insurance “ A promise of compensation for specific potential future losses in exchange for a periodic payment” Source: InvestorWords.com, 2003

5. Most property owners and renters in the United States have some form of insurance that protects either the structure itself, the contents of the structure, or both. However, this coverage is often limited, with specific preclusions against certain natural and technological disasters.

6. Policies for specific catastrophic hazards can be purchased separately from basic insurance homeowners’ or renters’ policies, or as riders to these policies

7. only those people who are likely to suffer the specific loss defined in the policy are likely to purchase that type of policy, creating the need for much higher premiums than if the specific hazard policy were spread across a more general population Adverse Selection

13. Flood Disaster Protection Act of 1973 Federal agencies and federally insured or regulated lenders had to require flood insurance on all grants and loans for acquisition or construction of buildings in designated Special Flood Hazard Areas (SFHAs) in communities that participate in the NFIP

17. Risk Sharing Pools Associations of public entities with similar functions that have banded together to share risks by creating their own insurance vehicles