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In law and economics, insurance is a form of risk management mainly used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the insurance; policyholder is the person or entity buying the insurance policy. The insurance rate is a factor used to determine the amount to be charged for a certain amount of insurance coverage, called the premium. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice.

Insurance involves pooling funds from several insured entities in order to pay for relatively uncommon but severely devastating losses which can occur to these entities. The insured entities are consequently protected from risk for a fee, with the fee being dependent upon the frequency and severity of the event occurring. In order to be insurable, the risk insured against must meet certain characteristics inالعاب order to be an insurable risk. Insurance is a commercial enterprise and a main part of the financial services industry, but individual entities can also self-insure through saving money for possible future losses. 
 
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