i.) Provides a means of shifting one's financial responsibility for loss to another party.

ii.) Payment made only in the event of the happening of a certain risk or peril.

iii.) Payment restricted to amount required to indemnify insured.

iv.) Covers losses to which the object of insurance *may* be exposed.

v.) Indemnity can be in the form of money or other thing of value.

i.) Auto insurance

ii.) Property insurance

iii.) Liability insurance

1.) Private Insurers;

i.) Stock companies;

• operate via private funds or public sale of stock.
• main goal to generate profit for shareholders (owners).

ii.) Mutual companies;

• owned by its policy holders
• main goal to provide insurance to its policy holders at as low a cost as possible, vs turning a profit
• profits returned to policy via dividends or rate adjustments

2. Government Insurers provide;

• medical insurance
• employment insurance
• worker's compensation
• mandatory auto insurance (Sask, BC, MB & QC)

1.) Direct Writing System;

• salary or commission from employer (insurer)
• insurer owns all business
• insurer performs admin functions

2.) Independent Brokerage System;

• earn commission from insurer
• brokerage owns all business
• provides client services for policy holders

3.) Agency System;

• paid commissions/ bonuses by insurer
• agents own their business