Insurance means of protection from financial losses due to fire, theft, and other unforeseen events.
Companies purchase insurance to protect themselves from the contingent, uncertain losses due to fire, natural and other unforeseen events. Insurance must be paid in advance. Insurance premiums (payments) normally are recorded as an increase (a debit) to the asset account Prepaid Insurance. At the financial statement date companies increase (debit) insurance Expense and decrease (credit) prepaid Insurance for the cost that has expired during the period.
Insurance is a contract whereby one party agrees to pay a sum to another party for a fee (premium) in the event that the latter suffers a particular loss. The person or firm that undertakes the risk is the insurer. The party desiring to be protected from loss is the insured party.
Insurance is the contract by which the insurer for a fee agrees to reimburse the insured a sum of money if a loss occurs.
Insurance is a written contract that transfers the risk of loss form the insured to the insurer, according to the terms specified in the contract.