Insurance companies use underwriting to determine whom they will insure and what they will charge for the coverage.
Insurance is a contract which is represented by a policy in which the policyholder receives the financial protection and reimbursement against losses amount from an insurance company.
The company generally pools risks of clients to make the payments more affordable for the insured persons.
Insurance policies are generally used to hedge against the risk of financial losses without considering that it is big or small which results from the damage to the insured person and his property or from liability for damage or injury caused to a third party.
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