What is Insurance and why do we need it?
Insurance is a precaution against a possible unwanted
outcome. Whether it's in your personal life or in business, it's a way of protecting your family, your
assets, managing risk and keeping things on the move.
We use insurance to protect against the possibility of loss, usually financial. When we buy insurance,
we transfer our risk to someone else in exchange for a payment or premium. Then, if we suffer a loss, insurance puts us back
into a position pre-claim (reinstatement).
And
if you think about it, nothing happens without insurance! We couldn't run businesses or drive cars, own homes or travel
anywhere without it, because the potential risks would be too great. Insurance gives us the peace of mind and security we
need to operate.
It works because insurance
companies group together a large number of people who all feel exposed to the same possible circumstances. The company knows
that, in any one year, the total premium collected from the group of people should cover the cost of the claims made by the
unfortunate few who actually suffer a loss.