Insurance companies are businesses that provide financial protection to individuals and organizations against potential losses. They collect regular payments, known as premiums, from policyholders in exchange for coverage. If a covered event occurs, such as an accident or damage, the insurance company compensates the policyholder according to the terms of the policy. These companies offer various types of insurance, including health insurance, auto insurance, and homeowners insurance. By pooling the risks of many clients, insurance companies can manage their financial exposure and ensure that they can pay out claims when needed. This system helps individuals and businesses mitigate the impact of unexpected events.