Insurance Act No. 2 Year 1992 on business insurance is an agreement between two or more parties, with which the parties committed themselves to the person insured, the insurance premiums received, to provide reimbursement to the insured for loss, damage or loss of expected profit or legal liability to third parties that may be suffered by the insured, arising out of an uncertain event, or provide a payment based on a person dies or lives insured.
Agency risk that channel called "insured", and the body receiving the risk is called "insurer". Agreement between the two entities is called policy: this is a legal contract explain each terms and conditions protected. Fees paid by the "tetanggung" to "insurer" for the risk it took called "premium". This is usually determined by the "guarantor" for funds that can be claimed in the future, administrative costs, and profits.
For example, a couple bought a house for Rp. 100 million. Knowing that the loss of their homes would lead them to financial ruin, they took the insurance protection in the form of home ownership policy. The policy will pay for replacement or repair their homes in case of disaster. Insurance companies on their premiums Rp1 million per year. The risk of losing their homes have been distributed from the company's homeowners insurance.
