Law and economic Insurance is a form of risk management, primarily used opposite to the risks of contingent loss. Word insurance mean is “protection against the losses”. Insurance is a risk of potential loss from one entity to the other for the exchange of premium and duty of care for the life, vehicle and other financial goods. It can be said that the insurance occurs with the appearance of human society. Insurance is intended to help the people. For example, if the house of anybody burns the people of society, the insur ance policy helps the effected person to build a new house. In 600AD, Greek and Romans introduced the origin of life and health insurance. England produced his first fire insurance company in 1680, for the people whose houses burn by fire. There are two types of insurance companies worldwide, first is life insurance and the second is general insurance company. The history tells that the insurance principals were present with human beings from the beginning. Men of early times used to help each other at misshapenness, like house burn and diseases etc. The early Mediterranean sailing merchants firstly practiced this system. At the beginning of each New Year of Iran, the people gave some gift to the monarch. If the gift of someone were worth more than 10,000 derricks, he would register with the special office. The main advantage of this registration was that, the registered person could help in the trouble of the monarch and court. Now there are numberless insurance companies working today around the world and a part of population is earning by this business.

There are a number of principles of insurance. The majority of insurance policies are offered for individual members of very high classes. Automobile insurance, for instance, enclosed about 175 million automobiles in the United States in 2004. The continuation of a large number of homogeneous introduction units permits insurers to get advantage from the so-called “law of large numbers,” which in consequence states that as the number of contact units enlarges the definite results are ever more likely to turn into close to probable results. Lloyd’s of London is well-known for insuring the life or health of actors, actresses and sports figures. Dependency launch insurance coats events are rare. Large profitable property policies may insure excellent properties for which there are no ‘homogeneous’ contact units. In spite of failing on this principle, many exposures are usually considered to be insurable.

The occasion that gives increase to the loss that is subject to insurance should, in any case, take place at a specified time, in an identified place, and from a known cause. The typical example is death of an insured person having a life insurance policy.
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