An Insurance Policy is a legally binding contract between the person who buys the policy and the Insurance company. The person who buys the policy is commonly called the "Policyholder", who is also often the person insured.
The policyholder pays a specified sum of money, called the "Premium" to the Insurance company in exchange for an agreement by the Insurance company to pay a certain types of loss or damage as specified in the contract. In the event a loss occurs, which meets all the requirements described by the terms of an Insurance policy, the loss is said to be "covered" by the policy.
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