In general, insurance is a legal agreement between an insurer and the insured, which define the covered claims that the insurer is lawfully obligated to cover. In return for an initial investment, commonly known as the premium, the insured promises to cover potential loss caused by potential perils outlined in the insurance policy terms. This includes risks such as damage from fire or theft, against which the insured has the legal duty to protect its income and assets. The insured may also lose income through damages caused by events covered by the policies, though these losses are generally excluded from the coverage of the policies. Insurance companies may use the term “insurance” to describe any form of agreement between an insurer and an individual or group of individuals. Insurance can also be used in the same way to describe any body of knowledge considered to be of primary importance to the proper functioning of a society.
The insured’s property and casualty insurance policy to provide protection from events occurring outside the covered premises, but within the area covered by the plan. This allows the insured to reduce its exposure to damage and loss that may occur outside of the insured’s property. Property and casualty insurance policy limits may include the following: total compensation, maximum liability, and liability for liability. These limits are typically adjusted on a regular basis. The insurer may also adjust the above limits based on actual losses experienced during the specified period.
Insurance endorsements allow the insured to provide additional protection to a business. Different endorsements include: property insurance, liability insurance, and business interruption insurance. Within the endorsements, there are two main types of risks to be insured: physical risks and economic risks. A physical risk is defined as a situation that exposes the insured to a loss that is directly related to the location of the insured, while an economic risk is described as a situation that exposes the insured to loss that is indirectly related to the location of the insured.