Definition

In law, insurance is a form of risk management primarily used to enclose against the risk of an uncertain loss. Insurance is defined as the fair transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the insurance; an insured, or policyholder, is the person or entity buying the insurance policy.

The transaction relates the insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in exchange for the insurer's promise to give back the insured in the case of a financial loss. The insured receives a contract, called the insurance policy, which details the situations in which the insured will be financially remunerated.
In law and economics, is a form of risk management primarily used to hedge against the risk of potential financial loss. Insurance is defined as the equitable transfer of the risk of a potential loss, from one entity to another, in exchange for a premium and duty of care.