What is insurance with example?

Insurance is a financial arrangement in which an individual or entity pays a premium to an insurance company in exchange for protection against specific risks or losses.

For example, consider auto insurance: A car owner pays a premium to an insurance company, and in return, the insurance company agrees to cover the costs of damages or injuries resulting from accidents, theft, or other covered incidents involving the insured vehicle. If the car is damaged in an accident, the insurance company will reimburse the owner for the repair costs, subject to the terms and conditions of the policy.