Monday Class Flashcards
Insurance
Contract whereby one party agrees to indemnify another party
Face Amount
the death benefit, how much the insured is covered for
Premium
a payment
Insurer
agent/company that is offering coverage
Insured
employee/person who is covered
Risk
the uncertainty of a loss
Pure Risk
means chance of ONLY loss; is insurable
Speculative Risk
involves a chance of loss or gain, not insurable
i.e; Gambling
Hazards
events or conditions that increase the chance of a loss
Physical Hazard
a physical condition, medical history
i.e; blindness, deafness, diabetes
Moral Hazard
a lie
Morale Hazard
doing really unsafe things
i.e; speeding, driving reckless
Risk Management Techniques
S.T.A.R.R
S: Sharing
for a group of individuals or businesses with the same or similar interests to share the losses that occur within that group.
ex: pension plans
T: Transfer
most effective way to handle risk, transfer to another party
ex: car insurance
A: Avoidance
eliminating exposure to loss
R: Retention
self-insured, able to cover cost of the loss yourself
R: Reduction
to lessen the possibility or severity of a loss
ex: installing smoke detectors
Exposure
is a unit of measure used to determine rates charged for insurance coverage
Tort
a wrong, can have legal consequences
Unintentional Tort
deliberate act that causes harm to another person (not considered breach of contract)
Intentional Tort
negligence
Peril
causes of a loss
Law of Large Numbers
predicts number of deaths that will happen in a similar group of people. The larger the number the more accurate the prediction
