Definition of Insurance:
Insurance is nothing but a system of spreading the risk of one onto the shoulders of many. Whilst it becomes somewhat impossible for a man to bear by himself 100% loss to his own property or interest arising out of an unforeseen contingency. Insurance is a method or process which distributes the burden of the loss on a number of persons within the group formed for this particular purpose.
Authors’ Definition on Insurance:
Insurance is an economic institution that reduces risk both to society and to individuals by combining under one management a large group of objects so situated that the aggregate losses to which society is subject become predictable within narrow limits. Insurance is usually effected by and can be said to include all legal contracts under which the insurer, for consideration, promises to reimburse the insured for any loss suffered during the term of the agreement.
---- Mark. R. Greene
M.N. Mishra’s functional definition of Insurance:
“Insurance is a co-operative device to spread the loss caused by a particular risk over a number of persons who are exposed to it and to agree to ensure themselves against the risk.”
M.N. Mishra’s contractual definition of Insurance:
“Insurance is that in which a sum of money as a premium is paid in consideration of the insurers incurring the risk of paying a large sum upon a given contingency.”
M.K. Ghosh & A.N. Agharwaola’s definition of Insurance:
Primary approach: “Insurance is a co-operative form of distributing a certain risk over a group of persons who are exposed to it.”
Modern approach: “Insurance in the new form may be defined as a contract whereby one party agrees to indemnify the other party against a loss which may arise, or to pay a certain sum of money on the happening of a certain event, in return of a compensation called premium.”
“Insurance is the agreement of community to consider the good of its individual members as common.”---- Prof. Morgan
“The insurance contract is an agreement by one party to assume another’s risk of loss in consideration for the payment of a premium, as part of a general scheme for the assumption of similar risk.” ---- Irwin. M. Taylor (Law of Insurance)