Provide assurance of protection from the risks of loss suffered by one party.
Improve efficiency, because it does not need to specifically hold the security and supervision to provide protection that takes a lot of energy, time and cost.
Equitable cost, that is enough just to spend a certain amount and do not need to replace / pay for their own losses which amount is not necessarily and uncertain.
Basis for the bank to extend credit because the banks require collateral protection of the collateral provided by borrowers.
For savings, because the amount paid to the insurance company will be returned in greater numbers.
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