Automobiles

Insurance is contract between two parties whereby one party agree to undertake the risk of another in exchange for consideration known as premium and promises to pay a fixed some of money to the other party on happening of an uncertain event(death or a after the expiry of certain period in case of life insurance or to indemnify the other party on happening of an uncertain event in case of general insurance.The major operation of an insurance companies are underwriting the determination of which risks the insurer can take on ,and rate making ,the decisions regarding necessary prices for such risk, The underwriter is responsible for guarding against adverse selection,wherein there is excessive coverage of high risk candidates in proportion to the coverage of low risk candidates.In preventing adverse selection,the underwriter must consider physical,psychological and moral hazards in relation to applicants. Physical hazards include those dangers which surround the individual or property of the insured.

Concept of Insurance
The concept behind insurance is that a group of people exposed to similar risk come together and contributions towards formation of a pool of funds.In case a person actually suffers a loss on account of such risk,he is compensated out of same pool of funds contribution to the pool is made by a group of people sharing common risk collected by the insurance company in the form of premium.