How Does Insurance Save A Person From Different Kinds Of Risks?

Risk avoiders want to avoid risks. But risks cannot simply be buried. When house burns down, when someone is killed in an automobile accident, or when a hurricane tears through Florida, someone, somewhere bear the cost.
Market handles risks by risk spreading. This process takes risks that would be large for one person and spreads them around so that they are but small risks for a large number of people. The major form of risk spreading is insurance, which is a kind of gambling in reverse.
Fro example, in buying fire insurance on a house, home-owners seem to be betting with the insurance company that the house will burn down. If it does not, the owners forfeit the small premium charge. If it burn down, the company must reimburse the owners for the loss at an agreed upon rate. What is true of fire insurance is equally true of life, accident, automobile, or any other kind of insurance.
The insurance company is spreading risks by pooling many different risks, it may insure millions of houses or lives or cars. The advantage for that insurance company is that what is unpredictable for an individual is highly predictable for a population.