A contract in which one party agrees to indemnify another
against a predefined category of risks in exchange for a
premium. Depending on the contract, the insurer may promise to
financially protect the insured from the loss, damage, or
liability stemming from some event. An insurance contract will
almost always limit the amount of monetary protection possible.
In the absence of insurance, three possible individuals bear the
burden of an economic loss; the individual suffering the loss;
the individual causing the loss via negligence or unlawful
conduct; or lastly, a particular party who has been allocated
the burden by the legislature, such as employers under Workmen's
Compensation statutes. While types of insurance vary widely,
their primary goal is to allocate the risks of a loss from the
individual to a great number of people. Each individual pays a
"premium" into a pool, from which losses are paid out.
Regardless of whether the particular individual suffers the loss
or not the premium is not returnable. Th