Q.Define Insurance.

Insurance is a contract in which the insurer agrees, for a premium, to indemnify the insured against a specified loss — a cooperative device that spreads risk over many.

In the Tamil Nadu HSC Commerce syllabus, insurance is defined as a contractual arrangement for managing risk.

• It is a contract between two parties: the insurer (insurance company) and the insured (policy-holder).
• In consideration of a payment called the premium, the insurer undertakes to compensate the insured for a loss arising from a specified risk or event.
• It is a cooperative device: the small premiums collected from many persons exposed to a similar risk form a common fund, out of which the losses of the unfortunate few are met. …