Insurance
Speculative risk
Events in which a person has both the chance of winning or losing are classified as
Restores an insured person to the same financial state as before the loss
In case of a loss, the indemnity provision in insurance policies
The cause of loss insured against
Peril is most easily defined as
Law of large numbers
state that the larger the number of people with a similar exposure to loss, the more predictable actual loss will be.
Insurable interest
the insured would incur a financial loss if the insured property was damaged.
Perils
are the causes of loss insured against in an insurance policy.
Pure risk
A situation in which a person can only lose or have no change represents
Larger
For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured group must become
Physical, moral, and morale
Hazards are classified as
Financial, blood, and business
The 3 elements of insurable risk are:
Speculative risk
involves the opportunity for either loss or gain.
Hazards
are conditions or situations that increase the probability of an insured loss occurring.
Proximate cause of loss
direct loss also includes other damage where the insured peril was the
Moral hazard
hazards refer to those applicants that may lie on an application for insurance, or in the past, have submitted fraudulent claims against an insurer.
Subrogation
is the insurer's legal right to seek damages from third parties, after it has reimbursed the insured for the loss.
Pure risk
refers to situations that can only result in a loss or no change.
The insured cannot collect but the mortgage holder will still be paid
The insured has violated the contract without the knowledge of the mortgage holder. After a loss
Insurance
What do individuals use to transfer their risk of loss to a larger group?
Insurance
transfers the risk of loss from an individual or business entity to an insurance company, which in turn spreads the costs of unexpected losses to many individuals.
Peril
A tornado that destroys property would be an example of which of the following?
Risk
is the uncertainty or chance of a loss occurring.
Subrogation
The transfer of an insured's right to seek damages from a negligent party to the insurer is found in which of the following clauses?
any condition or exposure that increases the possibility of loss
With respect to the business of insurance, a hazard is
Accident
a sudden, unplanned and unexpected event, not under the control of the insured, resulting in injury or damage that is neither expected nor intended.
Morale hazard
hazard refers to an increase in the hazard presented by a risk, arising from the insured's indifference to loss because of the existence of insurance.
Pure risk and speculative risk
The risk of loss may be classified as
Conditions
hazards and may increase the chance of a loss occurring.
At time of loss
Insurable interest in the property covered in a policy must be proven
Loss
Insurance is a contract by which one seeks to protect another from
Physical hazard
those arising from the material, structural, or operational features of the risk, apart from the persons owning or managing it.
Indemnity
(reimbursement) is a provision in an insurance policy that states that in the event of loss, an insured or a beneficiary is permitted to collect only to the extent of the financial loss, and is not allowed to gain financially because of the existence of an insurance contract.
Nothing
An insured carries a property policy on her home in the amount of $250,000. A bank is shown as the mortgagor in the policy. Last month the insured made her final mortgage payment, but did not remove the bank from the policy. In the event of a covered loss to her home, how much will the bank receive?
Law of large numbers
Which law is the foundation of the statistical prediction of loss upon which rates for insurance are calculated?
occurrence
losses caused by continuous or repeated exposure to conditions resulting in injury to persons or damage to property that is neither intended nor expected.