eli5, how do insurance companies make money.

Question

My cousin and I are going to try to start a business so we needed insurance. The insurance is a 160 something dollars a month and covers 2 1,000,000 dollars accidents. Where do they make there money?

In: Economics

Answer 1

If they’ve got like 550 people paying that $160 a month, and somebody makes a claim once a year that pays out $1 million, they still come out ahead.