Legal Definitions - insure

The term insure, as a verb, refers to the act of arranging for financial protection against a potential future loss or damage. This typically involves paying a regular amount, known as a premium, to an insurance company. In return, the company promises to pay a specified sum of money or cover certain costs if the covered event occurs. It can also mean the act of obtaining or providing an insurance policy for someone or something.

• Example 1: Protecting a Home

  When a family purchases a new house, they will typically insure the property against various risks such as fire, theft, or natural disasters. By paying a monthly premium to an insurance provider, they are securing a promise that the insurer will cover the costs of repairs or rebuilding if a covered event damages their home.

  How it illustrates the term: This demonstrates the act of securing financial protection (payment for repairs/rebuilding) against a potential loss (damage to the house) by paying a premium.

• Example 2: Securing Future Income

  A self-employed graphic designer, concerned about their ability to work if they become ill or injured, decides to insure their income. They purchase a disability insurance policy that will provide them with a portion of their regular earnings if they are unable to work due to a covered disability.

  How it illustrates the term: Here, the designer is arranging financial protection (income replacement) against a future loss (inability to work and earn money) by paying premiums to an insurance company.

• Example 3: Business Liability

  A small catering company often handles events at various venues. To protect itself from potential lawsuits if a guest gets food poisoning or an employee accidentally damages a venue, the company chooses to insure its operations with general liability coverage. This policy would cover legal defense costs and potential damages if such an incident leads to a claim.

  How it illustrates the term: The catering company is obtaining an insurance policy to secure financial protection (covering legal costs and damages) against potential future losses arising from its business activities.