Louisiana P & C General Insurance


A contract in which one party agrees to idemnify the insured party against loss.


Make whole

Pure risk

Situation that can only result in a loss or no change.

Speculative risk

Involves opportunity for loss or gain, for example gambling.

Not insurance risks

Speculative risks


Unit of measure used to determine rates charged for insurance coverage.


A large number of units have the same or similar exposure to loss is known as this.


A condition that increases the probability of an insured loss occurring.

Physical hazard

Individual characteristics that increase the chances of the cause of loss. They exist because of a physical condition, past medical history, or a condition at birth.

Moral hazard

Tendencies towards increased risk. Involve evaluating the character and reputation of the proposed insured.

Morale Hazard

Similar to Moral risks, except that they arise from a state of mind that causes indifference to loss, such as carelessness.


The reduction, decrease, or disappearance of value of the person or property insured in a policy, caused, by a named peril


Eliminating exposure to a loss

Risk Retention

The planned assumption of risk by an insured through the use of deductibles, copays, or self-insurance.


Method of dealing with risk for a group of individual persons or businesses with the same or similar exposure to loss to share the losses that occur with in the group.


Ways to lessen the possibility or severity of a loss.

Adverse Selection

The insuring of risks that are more prone to losses than the average risk

Law of Large Numbers

This law states the larger the number of people with a similar exposure to loss the more predictable the actual losses will be

Stock Companies

Insurance companies owned by stockholders who provide the capital necessary to establish and operate the insurance company and who share in any profits or losses.

Mutual Companies

Insurance companies that have no capital stock, but are owned by the policyholders

Fraternal Benefit Societies

An Organization formed to provide insurance benefits for members of an affiliated lodge, religious organization, or fraternal organization with a representative form of government.

Lloyd's Association

Organizations that provide support facilities for underwriters or groups of individuals that accept insurance risk


Insurance resulting from an interchange of reciprocal agreements of indemnity among persons know as subscribers collectively known as Reciprocal Insurance Company or Exchange.

Risk Retention Group

A liability insurance company owned by its members. Purpose of Risk retention groups is to assume and spread all or part of the liability of its group members

Captive insurers

Organized and owned by a corporation or firm to serve the parent organization's insurance needs at lower rates than other insurers and without the uncertainties of commercial insurance

Admitted or Authorized

An insurance company that has qualified and has received a Certificate of Authority from the Department of Insurance to transact insurance in that state

Certificate of Authority

A license from the State Department of Insurance that states an insurance company has the power to write insurance contracts in the state


An insurance company that is incorporated in this state.


An Insurance company that is incorporated in another state or territorial possession


An Insurance company that is incorporated outside of the United States


A contract under which one insurance company (The reinsurer) indemnifies another insurance company for part or all of its liabilities

Express Authority

The authority a principal intends to grant to an agent by means of the agent's contract. It is the authority that is written in the contract

Implied Authority

Authority that is not expressed or written into the contract but which the agent is assumed to have in order to transact the business

Apparent Authority

Aka perceived authority. The appearance or the assumption of authority based on the actions, words, or deeds of the principal because of circumstances the principal created.


An agreement between two or more parties enforceable by law


Something of value that each party gives to the other

Contract of Adhesion

A contract that is prepared by one of the parties (insurer) and accepted or rejected by the other party (insured)


The exchange of unequal amounts

Unilateral Contract

Only one of the parties to the contract is legally bound to do anything

Conditional Contract

A contract that requires that certain conditions be met by the policyowner and the company in order for the contract to be executed, and before the party fulfills its obligations


To restore the insured to the same condition as prior to loss with no intent of loss or gain

Utmost Good Faith

This implies that there will be no fraud, misrepresentation, or concealment between the parties.


Statements believed to be true to the best of one's knowledge

Material Misrepresentation

Statement that if discovered would alter the underwriting decision of the insurance company


An absolutely true statement upon which the validity of the insurance policy depends


The legal term for the intentional withholding of information of a material fact that is crucial in making a decision


The intentional misrepresentation or intentional concealment of a material fact used to induce another party to make or refrain from making a contract, or to deceive or a cheat a party


The voluntary act of relinquishing a legal right, claim or privilege


A legal process that can be used to prevent a party to a contract from re-asserting a right or privilege after that right or privilege has been waived. Estoppel is a legal consequence of a waiver