# Insurance

*Insurance — Finicade finance glossary*

Insurance is paying a small certain cost to avoid a large uncertain one, by pooling risk across many people. It works on the law of large numbers: one house fire is unpredictable, a million houses are a statistical problem. The rule that follows is counterintuitive but firm — insure what would ruin you, not what would merely annoy you, because every predictable small loss you insure is a loss plus the insurer's margin.

**Also known as:** insurance policy, cover, coverage

**Related terms:** [Insurance Premium](https://finicade.com/glossary/insurance-premium), [Deductible](https://finicade.com/glossary/deductible), [Underwriting](https://finicade.com/glossary/underwriting), [Law of Large Numbers](https://finicade.com/glossary/law-of-large-numbers), [Moral Hazard](https://finicade.com/glossary/moral-hazard)

Source: https://finicade.com/glossary/insurance