Definition Definition. Insurance
Insurance comes from the word insurance which means the coverage. Insurance is an agreement between the insured or the customer with the insurer or the insurance company. The insurer is willing to bear the amount of losses that may arise in the future after the insured agreed on the payment of money called the premium. Premium is the money spent by the insured in return for the insurer.

Insurance, Definition of Principle Functions
Formally, in the law, Insurance is defined as an agreement between two or more parties, in which the insurer binds itself to the insured, accepting the insurance premium, to provide reimbursement to the insured due to loss, damage or loss of expected profit or liability third-party law that may be subject to the insured, arising from an uncertain event, or providing a payment based on the death or life of an insured person.
Based on the Commercial Code (KUHD), Insurance or Coverage is defined as an agreement by which an insurer binds to an insured, accepting a premium, to provide replacement to him for a loss, damage or loss of expected profit, which may will suffer for an event that is not certain.
The terms of the insurance agreement as well as the rights and obligations of both parties are set forth in an insurance policy. Examples of insurance include life, accident, loss, health and fire insurance.
The party who issues the risk is referred to as the "insured", this is the customer or the community who delegates or transfers the risk to be received, while the party who receives the risk referred to as the "insurer" means an insurance company that covers or indemnifies the customer.
The agreement between the two parties is called policy. This policy is a legal contract that explains each protected terms and conditions. the expenses paid by the "insured" to the "insurer" for the risks they bear are referred to as "premiums". The premium value This is generally determined by the "insurer" consisting of future claimable funds, administrative costs, and profits.
Function Insurance Objectives
The main function of insurance is as a mechanism of transfer / risk transfer or risk transfer mechanism, namely transferring the risk from one party that is the insured to the other party ie the insurer. This transfer of risk does not mean eliminating the possibility of misfortune, but the insurer provides financial security facilities or financial security and peace of mind for the insured. In return, the insured must pay a premium in a relatively small amount when compared with the potential losses that may be natural.
Basic Principles of Insurance:
The basic principles that must be met by institutions or companies engaged in the insurance business are:
Insurable interest is the right to insure, arising from a financial relationship, between the insured and the insured.Utmost good faith is an action to express accurately and completely, all material facts or facts about something that will be insured either asked or not. The meaning is: the insurer must honestly explain clearly about the extent of the terms / conditions of the insurance and the insured must also provide a clear and true information on the object or interest that is insured. Proximate cause is an active, efficient cause that cause chain of events which gives rise to a result without the intervention of an active and start-up from a new and independent source. Indemnity is a mechanism by which the insurer provides financial compensation in an attempt to place the insured in his / her financial position shortly before the occurrence of a loss. Subrogation is the transfer of claim rights from the insured to the insurer after the claim is paid.Contribution is the right of the insurer to invite other insurers who both bear, but not necessarily the same obligation to the insured to participate in giving indemnity.
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Library:
Mangani. K. S., 2009, "Bank & Other Financial Institutions" Publisher Erlangga, Jakarta.