An insurance contract is a legal agreement between an insurance company and an individual or entity, known as the policyholder. In this contract, the policyholder pays a premium in exchange for financial protection against specific risks, such as accidents, health issues, or property damage. The terms of the contract outline the coverage provided, the duration of the policy, and the conditions under which claims can be made. When a covered event occurs, the policyholder can file a claim to receive compensation or benefits as specified in the contract. The insurance company evaluates the claim and, if approved, pays out according to the agreed terms. This process helps individuals and businesses manage potential financial losses.