Inexpensive Auto Insurance in Houston, Texas — Insurance Defined

You can buy cheap auto insurance in  from almost any insurance company in Alabama.  Insurance is essentially a technique for redistributing losses, whereby average loss cost is substituted with actual loss costs. The main function of insurance coverage is to reduce the quality of uncertainty through a pooling of risks. Insurance, like a co-operative arrangement, does not eliminate risks. Instead, it’s a device through which risks may be transferred. Find auto insurance in Houston at

Note, however, that just those risks that are considered pure are thought to become insurable. Speculative risks are not insurable and therefore aren’t the subject of insurance.

Insurance Defined
The term insurance has been variously defined by lawyers, economists and insurance executives. Although the aspects of risk and uncertainty are embodied in each definition, it is sometimes known as “social device,” but additionally it’s regarded as an agreement by which one party, for a consideration called the premium, assumes the potential risks of the second party and offers to pay an amount of cash to the second party around the occurrence of the risk assumed. The money to be paid for a claim is not necessarily an ascertainable sum (as in a liability claim), but a maximum amount specified in the contract.

With respect to the change in risk via insurance, it is important to see whether or not a transaction involves insurance. This is so because, if it does, it will be susceptible to regulations applicable to insurance; also, insurance organizations are susceptible to special tax laws. Hence, it is necessary to determine the transactions that are susceptible to a premium tax.

Anything is made between two parties–the insurer and also the insured. Insurers are insurance companies, also designated as underwriters or carriers. The insured may be the person or organization that obtains protection by the payment of premiums and compliance using the general requirements set forth in the con-tract. Insured’s are policyholders. While reference is made to insurer and insured, insurance coverage is certainly not a two-party contract and so will be viewed in subsequent discussions.

Note again that a cheap auto insurance in Alabama arrangement between the parties does not get rid of the risk; it merely transfers the danger from the insured towards the insurer and compensates the insured fully or partially for that contingency insured against. This is the essence of the insurance function of reducing uncertainty.

In the standpoint of persons who transfer risks via insurance, a state of certainty or security exists. Peace of mind in this context pertains to the substitution of a relatively small known “loss” (the premium) for potentially large unknown losses when the risk is not insured. When the outcome of every event might be predicted with accuracy, there’d be no chance occurrence and therefore no requirement for insurance.