Insurance revolves around risk reduction or mitigation through transferring the risks of individuals and firms to an insurance company. Insurers take on the risk and assume the losses suffered by the insured in return for consideration, i.e., a premium. The relationship between the two parties is regulated by the insurance policy contract, which clearly defines the extent of coverage and the situation where the insured can submit their requests for disbursement of the benefits specified in the contract.

This section is dedicated to insurance terminology and concepts: the terms commonly used by insurance companies, brokers, agents, regulators and broadly the insurance sector in an economy. Terms may still differ or be interpreted differently in various contexts, and for that reason different meanings are provided taking context into consideration.

Understanding insurance is a key element in understanding other areas in finance including business, risk management, derivatives, and so on.