An insured is a person or organization whose life, health, or property is covered by an insurance policy. The insured's loss results in the insurer's obligation to pay the proceeds of the insurance policy.
By contrast, the insurer is the party in an insurance contract that promises to pay compensation. The insurer is the entity, usually an insurance company, that underwrites the insured risk.
An insurance policy is the insurance contract that describes the conditions and circumstances under which the insurer will indemnify the insured or other named beneficiaries. The person or organization purchasing the insurance is known as the policyholder. The policyholder and the insured are often, but not necessarily, the same person, as insurance coverage can include an insured who does not purchase insurance.
A self-insured party is one that retains its own risk instead of transferring it to a third-party by purchasing insurance coverage.
The types of risks that can be insured against are set by state insurance laws. For example, New York’s INS §1113 outlines thirty-four different types of insurances that may be issued by licensed insurers in the state.
[Last updated in June of 2023 by the Wex Definitions Team]
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