What insurance is

Insurance, in simple terms, protects people and businesses against loss or damage by transferring
the risk to the insurer. Personal lines insurance is for private individuals who wish to insure their
belongings.

Risk assessment
Risk assessment must involve various factors. First, there is the need to identify and measure risks
that individuals face. One way of measuring risk is by their frequency and severity. Insurers also need
to understand the components of risk, such as uncertainty, and perils and hazards.

Insurable and uninsurable risks

Some risks are insurable risks, while others are not. Insurable risks are financial, pure, particular and
are unexpected or accidental.
Uninsurable risks, on the other hand, are non-financial, speculative, fundamental and against public
policy.

Insurable interest and indemnity

Two other concepts are key in insurance, namely the need for insurable interest, and the principle of
indemnity.