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Reviewed by May 19, 2023| Updated on
Insurance is a contract in which an individual or entity receives financial reimbursement against losses from an insurance company. The company pools clients risks to make payments more affordable for the insured.
Insurance policies are used to hedge against the risk of financial losses, both big and small, that may result from damage to the insured or her property, or from liability for damage or injury caused to a third party.
There is a multitude of different types of insurance policies available, and virtually any individual or business can find an insurance company willing to insure them for a price. The most common types of personal insurance policies are auto, health, homeowners, and life.
Businesses require special types of insurance policies that covers the risks faced by businesses of every type. For example, a restaurant needs a policy that covers damage or injury caused due to cooking. In the case of an auto dealer, coverage may be required against damage or injury caused during test drives.
How to choose the policy that best suits you: