An insurance company is a business that provides financial protection to individuals and organizations against potential losses. Customers pay a fee, known as a premium, in exchange for coverage that helps them recover from events like accidents, illnesses, or property damage. When a covered event occurs, the insurance company compensates the policyholder according to the terms of their agreement. This process helps reduce the financial burden on individuals and businesses, allowing them to manage risks more effectively. Common types of insurance include health insurance, auto insurance, and homeowners insurance.