Contract: Insurance is a contract between insurer and the insured. The insured makes an offer and the insurer accepts this offer through the contract. It is always made in writing.
Consideration: Insurance is a contract whereby one party takes over the risk of other party and promises pay a certain sum of money to the insured or to his nominee a certain sum of money on happening of an event for a consideration. This consideration is called premium.
Cooperative endeavor: Large number of persons transfers their risk to an association which is formed for this purpose. So we can say that the insurance is cooperative endeavor of large number of individual who are ready to share risks.
Protection of monetary risks: Insurance covers only monetary risks. That means the risks which can be measured in terms of money.
Good faith: In insurance utmost good faith is required on the part of all parties.
Contract of indemnity: All contract of insurance except life insurance is a contract of indemnity.
Not gambling: It is not gambling because the insurer is assured to get his loss of indemnity if the event concerned is happening.