Fire or windstorm damage to home. Liability for damages done by your car. Liability for damages suffered by someone on your property. This list could go on and on, but the point is that each risk or loss has a special meaning to each individual and household. There are risks no one can avoid.
Insurance is one means of providing financial protection against the risk of unexpected losses.
You trade a series of annual payments for the assurance that you won't have to take a major loss at some unknown time. One person alone would find it difficult if not impossible to provide this protection because the possibility of a loss cannot be predicted as well for one person as for a group. Large groups of people can pool or transfer their risks to an insurance company. The individual pays the company a specified amount called the premium. The size of the premium is based on the frequency of losses by the group in past years, and the costs of company administration and selling divided by the number of people in the group.