The future is unknown and consequently, risks are inherent. Risks, specifically downside risks, can result in large losses which can deplete the resources of a person. On the other hand, there may be future outcomes which may result in substantial gains (upside risks). Most persons, however, are concerned with the effects of downside risks; insurance is used to lessen the effects of these risks.
Insurance is an agreement in which one party (the policyholder) makes periodic payments called premiums to another party (the insurer) who agrees to pay the policy holder a defined sum (claim payment or benefit) in the event of a specific loss. Specifically, motor vehicle insurance is insurance purchased for cars, trucks, motorcycles and any other motorized road vehicles. This prevents the policyholder from bearing the total costs of losses arising from damage and/or bodily injury resulting from traffic collisions, theft of the vehicle or other damage caused to the vehicle. Instead, the insurance company offset a significant portion of the costs.
In Jamaica, motor vehicle insurance is offered by general insurance companies which are the underwriters for policies, sales agents, brokers and account executives. As at June 2015, there are 22 insurance agents, 26 insurance brokers and 10 general insurance companies that are licensed to offer motor vehicle insurance.