What does "PERSONS" include?
Individual human beings, associations, organizations, corporations, partnerships, and trust.
What is the definition of "Insurance" ?
is a contract whereby one undertakes to indemnify another against loss, damage, or liability arising from a contingent or unknown event.
What is the definition of "Risk" ?
Uncertainty or chance of a loss occurring.
What are the 2 type of Risk?
Pure Risk & Speculative Risk
What is the definition of "Pure Risk" ?
Are situations that can only result in a loss or no change. There's no opportunity for financial gain.
What risk is the only type insurance company accept?
Pure Risk
What is the definition of "Speculative Risk" ?
Has the opportunity for either loss or gain.
What type of risk does the insurance company NOT accept?
Speculative Risk
What is the definition of "Peril" ?
the causes of loss insured against in an insurance policy.
What are the causes of loss insured against in an insurance policy for "Life Insurance"?
The financial loss caused by the premature death of the insured.
What are the causes of loss insured against in an insurance policy for "Health Insurance"?
The medical expense and/or loss of income caused by the insured's sickness or accidental injury.
What are the causes of loss insured against in an insurance policy for "Property Insurance"?
The loss of physical property or the loss of its income-producing abilities.
What are the causes of loss insured against in an insurance policy for "Casualty Insurance"?
The loss and/or damage of property and resulting liabilities.
What is the definition of "Hazard" ?
Conditions or situations that increase the chance of an insured loss occurring.
What are some examples of Hazardous Conditions?
Slippery Floors and Congested Traffic
What is "Physical Hazard"?
Can come from material, structural, or operational features of the risk - it can cause harm with or without contact.
What is "Moral Hazard"?
is anyone that lies on an application for insurance, or in the past, have submitted fraudulent claims against an insurer.
What is "Morale Hazard"?
insured's indifference to a hazard because they currently have insurance.
What's an example of "Morale Hazard"?
I'm not going to fix this. If it breaks my insurance will pay for it.
What is "Legal Hazard"?
Laws or regulation that force insurance company to cover risks that they would otherwise not cover.
What is the "Law of Large Numbers"?
To share risk among a large pool of people w/similar exposure to the loss.
Forms the basis for how insurance rates are calculated.
What does "Exposure" mean?
Is a unit of measurement that determines rates charged for coverage.
What is the basis of insurance?
Is sharing risk between a large number of homogeneous group with similar exposure.
What is a "Homogeneous Group"?
A large number of units w/same or similar exposure of loss.
What is the definition of Loss for Property Insurance?
The amount of reduction in value of the insured property, caused by a peril.
What is the definition of Loss for Casualty Insurance?
Amount paid to the 3rd party on behalf of an insured who is legally obligated to pay.
What is the definition of Loss for Insurer Operations?
Is the basis of a claim for indemnification or damages against an insurance policy.
What is the definition of Loss Exposure for Property Insurance?
Is based on the Location, type of construction, Occupancy, Adjacent Structures, Fire Protection Class.
What is the definition of Loss Exposure for General Casualty?
Area, Payroll, Gross Receipts, Insured's Risk and Location.
What is the definition of loss exposure for Automobile Liability?
Drivers Age, Territory of Garage.