Insurance in Act 2 Year 1992 on business insurance is an agreement between two or more parties, with which the insurer is binding to the insured, by accepting the insurance premium, to provide reimbursement to the insured for loss, damage or loss of expected profit or legal responsibility to a third party which may be suffered by the insured, arising out of an uncertain event, or provide a payment based on life or death of an insured person.
Agencies that distribute risk called the "insured", and the bodies which accept the risk of so-called "insurer". The agreement between the two bodies is called the policy: this is a legal contract that explains every term and condition of the protected. Fees paid by the "tetanggung" to "insurer" for the risks covered by so-called "premium". This is usually determined by the "insurer" 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 lost 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 amounting to Rp1 million per year. The risk of loss of homes have been channeled from the homeowner to the insurance company.
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