'Insurance', in law and economics, is a form of risk management primarily used
to hedge against the risk of a contingent loss. Insurance is defined as the
equitable transfer of the risk of a loss, from one entity to another, in
exchange for a premium, and can be thought of a guaranteed small loss to prevent
a large, possibly devastating loss. An 'insurer' is a company selling the
insurance. The ' insurance rate' is a factor used to determine the amount,
called the 'premium', to be charged for a certain amount of insurance coverage.
Risk management, the practice of appraising and controlling risk, has evolved as
a discrete field of study and practice.
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