Insurance - Risk Management

Human beings have to face a lot of risks and uncertainties in their life. The happenings of such risk are unavailable and uncertain in future. E.g. a person may die due to accident, sickness etc. The business properties such as buildings, godowns, stock of goods, vehicles, etc may be lost or dmaged due to fire accident etc. and a ship carrying a cargo may be lost due to sea perils.
All kinds of risk or loss can be transferred to insurance company. Then insurance company gives full compensation against the actual loss.
Insurance may be defined in the following ways;

1. Functional definition:
   Insurance may be defined as a co-operative device which gives protection to the persons against the risk of loss of life and properties by diffusing such risk among the persons who is involved in the co-0perative device.
2. Contractual definition:
   Insurance is a contract between the insurer and insured under which the insurer agrees to pay the full compensation to the insured against certain risk of loss due to fire, accident etc for the payment of certain amount as insurance premium.

The insurance may be defined as a means or device under which the insurer agrees to pay full compensation against the actual loss due to accident etc by diffusing the risk of loss among the people.
There are two parties in an insurance contract. One is insurer i.e. insurance company and the other is insured. The insured has to pay certain amount as premium to the insurer in order to enter into the insurance contract. Then, the insurer agrees to pay the full compensation t the insured against the actual loss of the subject matters.
Types of insurance
There are different kinds of insurance. Some of them are as follows:

1. Life insurance
2. Fire insurance
3. Marine insurance
4. Personal accident insurance
5. Vehicle insurance
6. Health insurance