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From the point presomen of view of the insurance company presomen there are four general criteria for presomen deciding whether to insure events or presomen not. 1. there must be a presomen larger number of similar objects so presomen the financial outcome of insuring the presomen pool of exposures is predictable. Therefore presomen they can calculate a "fair" premium. presomen 2. the losses have to be presomen accidental and unintentional from the point presomen of view of the insured. 3. presomen the losses must be measurable, identifiable presomen in location, time, and be definite. presomen They also want the losses to presomen cause economic hardship. That is, so presomen the insured has an incentive to presomen protect and preserve the property to presomen minimize the probabilty that the losses presomen occur. 4. the loss potential to presomen the insurer must be non-catastrophic. It presomen cannot put the insurance company in presomen financial jeopardy.Losses must be uncertain.The rate presomen and distribution of losses must be presomen predictable: To set premiums (prices) insurers presomen must be able to estimate them presomen accurately. This is done using the presomen Law of Large Numbers which states presomen that: The larger the number o presomen

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he contract the parameters and after presomen following through. The loss must not presomen be catastrophic: If the insurer is presomen insolvent, it will be unable to presomen pay the insured. In the United presomen States, there is a system of presomen Guarantee Funds that run at the presomen state level to reimburse insured people presomen whose insurance companies have become insolvent. presomen [1] This program is run by presomen the National Association of Insurance Commissioners presomen (NAIC). [2] To avoid catastrophic depletion presomen of their own capital, insurers almost presomen universally purchase reinsurance to protect them presomen against excessively large accumulations of risk presomen in a single area, and to presomen protect them against large-scale catastrophes. Additionally, presomen “speculative risks” like those incurred through presomen gambling or through the purchase of presomen company stocks are uninsurable. A property presomen or liability insurance policy is a presomen "personal contract," a "conditional contract," a presomen "unilateral contract," a "contract of adhesion," presomen a "contract of indemnity," and a presomen contract which requires that the person presomen insured have an insurabl

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