The payment of a small expected amount of money ("premium") to guard future against a larger erratic loss/claim. This always take a lot of risk away from you to the insurance company against a specific fee. This protection comes in several ways. Liability Insurance Property Insurance Professional Insurance Liability insurance is the guard provided to you by the insurance companies, convincing you to pay premium the amount you become lawfully compelled to pay. in fewer cases this could resolve in the court but mostly issue is "settled" between you and the insurance companies. For example your houseguest trips and spray on the ice of the footpath, and put all the blame on you for bad sand or salt. In such case your insurance company responds by simply paying for her medical expenses, and maybe other losses caused due to the accident. Property Insurance is tangible protection than liability. Property insurance protects exist able assets against damage or loss of use. War is not included on almost every insurance policy; which is why during 9/11 incident, when President Bush announced its war, he at once voided coverage for all of minor Manhattan. Fire accidents are included on almost every insurance policy, no matter its cheap insurance company or expensive because fire insurance is one of the most important part of property insurance. Professional Insurance covers the liability for specific professions. Doctors, Lawyers and Engineers etc. They have to participate on this type of insurance in case they make a wrong decision or provide poor advice. This type of insurance is bit expensive than rest, especially in fields like the medical, where professionals make judgments several times a day. Insurance not only protect you and your family but it is an under rated factor of success and stability of developed countries specially it is the major factor of America's economic success. If you lease your vehicle or mortgage your house, then what your bank does? They want to make sure that their money is protected in any case. Banks never lend you money unless they are certain to get back their investment. therefore, insurance gives protection for the consumer lending process that proves the backbone of the American economy.