The definition of insurance can be made from two points:
Functional definition.
Contractual definition.
Functional definition
Insurance is a co-operative device to spread the loss
caused by a particular risk over a number of persons who are exposed to it and
who agree to insure themselves against the risk.
General Definition
Insurance has been defined to be that in which a sum of
money as a premium is paid in consideration of the insurer’s incurring the risk
of paying a large sum upon a given contingency.
In the words of John Magee, “Insurance is a plan by themselves which
large number of people associate and transfer to the shoulders of all, risks
that attach to individuals.”
