GENERAL INSURANCE CONCEPTS Flashcards
(11 cards)
What is Risk?
The chance of a loss occurring.
What is Peril?
The cause of a loss (e.g., fire, accident, illness).
What is Hazard?
Increases the chance of a peril happening (e.g., smoking = health hazard).
What is Loss?
The unintentional decrease in value due to a covered event.
What is the Law of Large Numbers?
The bigger the group, the more predictable the risk.
What is Insurable Interest?
Must exist at time of application (life insurance) to buy a policy.
What is Indemnity?
Restoring someone to their original financial position after a loss.
What is Adverse Selection?
The tendency of higher-risk individuals to get insurance.
What is Reinsurance?
Insurance for insurance companies to spread risk.
What is Underwriting?
The process of evaluating risk and assigning coverage/premiums.
