Final answer:
Insurance protects against potential financial losses or liability resulting from unexpected events.
Step-by-step explanation:
True. Insurance is a method that households and firms use to protect themselves against potential financial losses or liability resulting from unexpected events. By paying regular premiums, individuals or businesses transfer the risk of these events to an insurance company. If a specified bad experience occurs, such as a car accident or damage to property, the insurance company provides financial compensation to the insured party from a pool of money.