Decentralized insurance on Ethereum has the potential to challenge traditional insurance models by leveraging blockchain's transparency, immutability, and trustless nature. Smart contracts automate claims processing, reducing overhead costs and eliminating intermediaries, which can lower premiums and enhance efficiency. Policyholders benefit from greater control, as terms are encoded on-chain, ensuring fairness and reducing fraud risks. Parametric insurance, enabled by oracles, triggers payouts based on predefined conditions, offering faster settlements than traditional systems. However, challenges like scalability, high gas fees, and regulatory uncertainty could hinder adoption. While traditional insurance relies on centralized authority and opaque processes, decentralized models empower users but face technical and legal hurdles. Ethereum’s ecosystem is still maturing, yet its innovative approach could disrupt the $4.7 trillion global insurance market if solutions scale effectively.