What do you understand by an insurance policy?

The insurance policy is a written contract between the policyholder and the Insurer. An entity or organization which provides insurance is called an insurer, an insurance company, or an underwriter, and the person or entity who buys the insurance is called a policyholder.

Insurance policies are mainly used to hedge against the risk of financial losses, both big and small, resulting from damage to the insured or their property or liability for damage or injury caused to the third party.