Insurance is a contract whereby one party (the insurer) undertakes, a premium that pays the other party (the insured), to compensate damage or meet the agreed service if the scheduled event occurs, as can be an accident or a fire, among others.
The insurance contract may cover all risks if insurable interest exists, unless expressly prohibited by law. For instance:
- The risk of fires.
- The risks of crops.
- The duration of life of one or more individuals.
- The risks of the sea.
- The risks of transport by air or land.
The insurer is usually an insurance company organized as a limited company; but there are also cooperative and mutual insurance companies and even a government agency – The Savings and Insurance – performs such operations. Also, in some provinces they operate official insurers.
The insurance contract is consensual, bilateral and random. It is consensual because it is perfected by mere consent of the parties and produces its effects has been made since the convention; is bilateral since it creates reciprocal rights and obligations between insurer and insured, and is random because it refers to compensation for loss or damage caused by an event or an uncertain fact, it is not known whether to produce and Otherwise – as with death – no one knows when it will come to pass.