Insurance relationship is a contractual one. Insurance involves large numbers, statistics, and derived probabilities. If insured person suffers a loss, the insurer makes payment to either the insured or a beneficiary, depending on the type of policy. Indemnity is based on the grounds that insurance is a system for distributing losses and not one that enables the insured to make profits. An injured person is only limited to payment for loss actually suffered.
Indemnification addresses moral hazards attendant on insurance.
Insured can mean two things, one for property and liability insurance and one for life insurance. The risk of loss is distributed by insurers, by two risk-spreading techniques. And by reinsurance, which is the transfer by an insurer of a part of the group risk it has assumed to another insurance company. An insured person must have an insurable interest in the property or the life that is being insured. An insurable interest is a relationship with a person or thing that supports the issuance of an insurance policy.