When deciding whether to insure or not, one needs to weigh the cost of transferring the risk against the cost of bearing the loss.
Insurance involves a contractual agreement known as Insurance Policy in which the insurer agrees to provide financial protection against certain specified risks for a price or consideration known as the premium
Elements of a valid contract - Offer and acceptance,Consideration,Agreement between parties,Free consent,Capacity of the parties,Legality
Offer and Acceptance - the offer is made by the proposer, and acceptance made by the insurer. The policy bond becomes the evidence of the contract
Consideration - Premium is the consideration from the insured, and the promise to indemnify, is the consideration from the insurers.
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