Insurance
Insurance is a contract between you and an insurance company.
When you buy insurance, you pay an amount of money every month or every year. The insurance company pays you if an accident happens that lowers the value of the insured item (a loss).
Insurance works by collecting small amounts of money from many people and paying the few people who have a loss. The amount that the insurance company will pay is in the contract.
People use insurance to protect themselves against big losses, like a fire or a car accident.
You must have some kinds of insurance (like car insurance) by law.
You can choose to have other kinds of insurance. Many people have insurance to protect themselves and their families from big losses.
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