The insurance industry is made up of companies offering risk management in the form of insurance contracts.

Briefly, clients purchase insurance policies from an insurance company in order to be protected against events that could result in financial harm, such as automobile accidents or a home fire. In return for payment of a premium, the insurance company agrees to pay the customer's claim should one of these events occur.

To use a personal experience as an example, our home heating system failed shortly before Christmas, while my wife and I were away from home. Since this was late December and we live in Maine, we returned on the day before Christmas to find that our pipes had frozen, and most of them had broken, on two floors and the crawlspace. Since we had an insurance policy on our home, and the fault was not ours, the insurance company paid the considerable cost of a plumbing crew being here until midnight on Christmas Eve, and all of Christmas Day, including everything that went into the job. The experience was uncomfortable, but it wasn't a financial burden thanks to a reliable insurance policy.

On the other hand, if I were to pay for an insurance policy for thirty years without anything ever going wrong, my payments would be pure profit for the insurance company.

The insurance industry is comprised of businesses that provide financial protection against risks, including death, illness, injury, disability, and the loss of property.

There are three main sectors to the insurance industry: property/casualty (auto, home, and commercial insurance), life/annuity, and private health insurance. Life/annuity and property/casualty insurers can also write health coverage policies in most jurisdictions.

Also known as insurance carriers, insurance companies are businesses that provide financial protection against potential losses. They collect payments in the form of premiums from policyholders.

The objective of an insurance carrier is to protect policyholders from financial loss in the event of a covered incident. In order to accomplish this, insurers pool the premiums paid by all policyholders and use this to pay the claims of those who have suffered a loss. In order to be financially solvent, insurers carefully manage their finances, pay only covered claims, and invest premiums judiciously.

The industry is sustainable because most people do not have large losses very often, and because the pool of premiums is invested. When financial losses do transpire, the existence of a reliable insurance policy can make these incidents financially manageable.

When a client purchases an insurance policy, he or she becomes a policyholder. For the protection of policyholders, insurance companies are regulated by state governments. In each state, an insurance commissioner is responsible for ensuring that insurers comply with applicable state laws regulating the industry.

Many insurance companies are organized as stock corporations, with shareholders owning the company. A board of directors manages the affairs of the corporation, while officers carry out the day-to-day operations.

Health insurance covers the policyholder's medical expenses in the event of a covered illness or injury. This can help to pay for the cost of seeing a physician, hospital stays, prescription drugs, and so on. Several different plans are available, so it's important to know what your plan does or does not cover, as well as how much of the cost it will cover.

Most states require drivers to have an auto insurance policy, which provides protection in the event of an automobile accident. Depending on the policy, it can cover needed repairs to the policyholder's care, as well as medical expenses and property damage.

Homeowners or renters insurance protects the policyholder's home or rental property from damages such as fire, floods, theft, and vandalism, as well as liability protection in the event that someone is injured on the property.

There are two types of life insurance: term life insurance and whole life insurance. Term life offers protection for a specific period of time, usually from ten to thirty years, while whole life provides lifetime protection and builds cash value over time that can be accessed in the policyholder's later years.

Another type of insurance is liability insurance, which can protect a policyholder in the event of a lawsuit over damages or injuries that the policyholder may have caused unintentionally.

If a policyholder dies unexpectedly, life insurance can help the family cover funeral expenses and related costs. If you are seriously injured or become ill, health insurance can help with the medical costs, while homeowners insurance may cover damage to your home caused by fire, vandalism, or other causes.

Insurance companies are businesses that provide protection against covered financial losses.

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