"Buying peace of mind"
Insurance is a contract designed to share the losses of the few by pooling them among the many who are exposed to the same chances of suffering losses. Insurance can be described with three basic principles:
The premiums of many policy holders who do not suffer losses, reimburse the losses of the few who do.
Premiums, within reasonable limits, reflect the degree of risk.
The only dividend or return on your investment is financial peace of mind. So, if you have no losses, you cannot "cash in" your workers compensation insurance policy. However, insurance companies may offer credits or discounts for employers with no or few losses. Policyholders with no or few losses help compensate those who have losses. While we cannot predict the future, we can remove the anxiety of uncertainty by obtaining insurance.
Accidents happen - at home, at work, on the road. Insurance is based on the assumption that, over time, some policyholders will have substantial claims, while others will have small claims or no claims at all. That's why insurance costs are directly related to risk. The bigger the risk (luxury car, mansion for a home, chronic illness, hazardous business, etc.), the higher the premium.
Insurance companies protect the general public from catastrophic events. By paying insurance premiums, the general public can transfer the risk of loss to insurance companies. So the general public can now avoid the risk and the insurance companies assume or take on the risk.