An insurance premium is the amount of money the customer pays to the insurance underwriter each month to maintain the policy. Insurance premiums cover the cost of providing coverage by the insurance company based on the risk or probability of loss.

An insurance underwriter is the company that takes on the risk of covering a specific type of loss event in exchange for payment of premiums during the term of the policy. Insurance underwriters pool the risk of loss across large numbers of policyholders and set premiums based on the managed risk of coverage.

An insurance claim is the notification of the underwriter by the policyholder that a covered loss has occurred. Insurance companies have specific processes for policyholders to file insurance claims in the event of loss along with service level expectations for claim processing that are detailed in the insurance policy contract.

An insurance adjuster is an employee of the insurance underwriter who investigates covered loss claims and authorizes payouts. Once the policyholder files a claim and insurance adjuster will contact the policyholder to understand the time, date and nature of the covered claim and make an adjustment or payment based on eligibility, less any deductible.

Self insurance is a process by which a person or company assumes the risk of loss themselves by saving the money that would have otherwise been paid in the form of premiums in order to build up a fund to cover potential losses. Individuals that choose to self insure bare all the risk for a loss event rather than pooling the risk with other people who might also experience the type of loss that might present financial loss.