Insurance is a social service in which many people (insured) collectively contribute some amount of money (premium) into a pool. It is from the pool that the few that surfer losses are indemnified.
It is pertinent to note that while a minor loss may not affect a company’s operation significantly, a moderate misfortune can put a corporate entity out of business for some time, which could result to an unquantifiable loss of revenue. In addition, a serious misfortune may occur and a company forced out of business forever, if not insured.
It is for this reason that Banks /Financial institutions insist that some form of insurance be taken whenever loan facilities are granted to either individual or corporate bodies.