Insurance is a social instrument to reduce the risk of life and as well as property. Insurance works when an individual pays periodic payments to cover the type of risk involved with the property that is to be insured. The types of risks that can be insured by any individual are such as risks against that include fire, threat of the sea, death, unpleasant incident, and theft. Any particular risk contingent upon these may be insured against at a premium matching with the risk involved. In other words it is a type of agreement between two parties, that is the insurance company, also called as the insurer, and the individual involved, who can be referred as the insured. So the contract statement for the insurance will read as the insurers will have to pay the financial losses suffered by the insured as a result of the occurrence of any unexpected events that cause damage to the insured property, in return for the payment of regular premium by the insured on regular period. This act works in such a way that the premium paid by the entire insured, sum up to the total amount that is paid to the unfortunate ones who suffer.