What does insurance mean?
Insurance is a contract that helps individuals and organizations manage the financial consequences of uncertainty. In return for regular payments, called premiums, an insurer agrees to cover specified risks, such as damage to property, medical expenses, legal liability, or the financial loss associated with a person’s death. The protection may be mandatory, as with many forms of health or vehicle insurance, or voluntary, as with travel or life insurance. The term can refer to an individual policy, the protection itself, or the business of providing insurance. Although an insurance policy pays only for losses covered by its terms, insurers may also provide related benefits, such as risk assessment, advice, or preventive services. Insurance is therefore both a legal-financial instrument and a means of transferring risk from individuals and businesses to specialized companies capable of spreading that risk across a larger population.
nounAn arrangement or contract under which a company agrees to provide financial compensation for specified losses, such as damage, illness, or death. By extension, it refers to the protection or coverage provided by such an arrangement.
- An arrangement or contract that provides financial compensation for specified losses.
- The protection or coverage supplied by an insurance arrangement.
- The business or industry of providing such contracts.
"After the fire, the family received compensation from their home insurance."
"Health insurance covers much of the cost of necessary medical treatment."
"She took out travel insurance before booking the flight."
Rare and chiefly used when referring to several distinct policies or insurance arrangements; the ordinary noun is normally uncountable.
"The broker arranged separate insurances for the buildings and the equipment."
Insurance is a wager with the future—except that its purpose is to spare you the worst of it.
Reviewed by Deb Chak, Editor. AI-assisted content curated by RJS Tech Solutions LLP.
Where does insurance come from?
The word entered Middle English in the 14th century from Anglo-French and Old French forms meaning assurance or security. These French words were related to “ensure,” which derives from Latin securus, meaning “safe” or “secure.” The same Latin root also produced cognates including assurance, ensure, secure, and security.
How insurance is actually used
The word is normally uncountable in general use, although “insurances” is occasionally used for separate or distinct arrangements. British and American English both use “insurance,” while “cover” is especially common in British usage and “coverage” is particularly common in American English. The spelling “insure” is a verb meaning to arrange insurance, not another form of the noun.
Easily confused with insurance
Insurance is generally an arrangement that compensates for specified losses, whereas assurance often means a guarantee or promise; in British financial usage, life assurance is a type of insurance.