Property & casualty insurance(ohio)

Pure risk

Refers to situations that can only result in a loss or no change. There is no opportunity for financial gain. Pure risk is the only type of insurance companies are willing to except.

Reinsurance

A contract one insurance company (the reinsurer) indemnfies another insurance company (ceding company) for part or all of its liablities

Exposure

A unit of measurement used to determine rate charge for insurance coverage.

Physical

Hazards are individual characteristics that increase the chances of the cause of loss. Physical hazards exist because of physical condition, ice on a sidewalk.

Avoidance

Eliminating exposure to loss. Risk avoidance is effective, but seldom practical.

Hazard

Hazards are conditions or situations that increase the probability of an insured loss occurring. Hazards are classified Physical, Moral, and Morale.

Property insurance

Insurance against the loss of physical property. Described as two (2) party Insurance, the insurer and the insured.

Insurance

Insurance transfers the risk of loss from an individual or business entity to an insurance company, which in turn spreads the cost of unexpected loss is to many individuals.

Speculative risk

Involves the opportunity for your loss or gain. And example of speculative risk is gambling. These types of risks are not insurable.

Loss

Is the reduction, decrease, or disappearance of value of the person or property insured in a policy, caused by a named peril. Insurance provides a means to transfer a loss.

Moral

Moral hazards are tendencies towards increased risk. (Dishonesty) Moral hazards involve evaluating the character or reputation of the proposed insured.

Morale

Morale hazards arise from a state of mind that causes indifference to loss, such as carelessness. (Not locking your front door)

Five elements of insurable risk

Must be: due to chance (accidental); measurable; calculable; affordable; exclude catastrophic perils

Casualty insurance

Only provides coverage when the insured is legally for causing injury or damage. Legal liability is the responsibility under the law or contract for an act or failure to act.

Perils

Perils are defined as a potential cause of loss, ( Fire, Lightning, Hail)

Risk

Risk is the uncertainty or chance of loss occurring. The two types of risks are pure and speculative, only one which is insurable (Pure you can insure!)

Retention

Risk retention is planned assumption of risk by the insured through the use of deductibles or self-insurance.

Methods of handling risk

STARR - Sharing, Transfer, Avoidance, Retention, or Reduction

Insurance transaction

Solicitation, negotiations; sale, advising and individual concerning coverage or claims