Study 2 Flashcards
(21 cards)
Indemnify
Insurance company providing compensation for loss or expenses
Example: Insurance paying for hourse repairs after a fire
Premium
Amount paid for insurance coverage
Example: Paying a monthly $100 for car insurance
Contract
A legal agreement between the insurer and insured that outlines everything.
Agent
A person licensed and authorized or employed to act on behalf of another
Example: An insurance agent helps you choose and buy the right home insurance policy.
Broker
Licensed person or firm who represents the insured and helps arrange insurance with companies.
Example: A broker compares policies from different insurers to get you the best coverage.
Adjuster
Investigates insurance claims to figure out how much the insurance company should pay.
Independent adjuster
- Settles claims for insurance companies but is not employed by any single insurer.
- Alternatively, a quailed independent businessperson
Public adjuster
Helps the insured settle claims, for a fee.
Spread risk
- Not putting all the financial burden in one place.
- Instead, it’s shared among many people or companies so no single person suffers a huge loss.
Spread Risk (achieved by one or more of the following)
1.Volume - The more people insured, the easier it is to use everyone’s payments to cover a few losses.
2.Diversity of type of risk- Offering many kinds of insurance (like car, home, life) helps balance out losses in one area with profits in another.
3.Diversity of location- Covering people in many locations reduces the chance of one disaster (like a flood or wildfire) costing too much.
Telematics
A field combining telecommunications, vehicle technology, road safety, and computer science.
Example: GPS and wireless communication.
Double hardships
Facing two tough problems at once, making things harder to handle.
Loss Prevention Activities
Actions taken to reduce the chance of a loss happening
Example: Installing alarms or doing regular maintenance.
Loss reserve
Money set aside by an insurance company to pay future claims.
Incurred but not reported (IBNR) losses
Estimated costs of claims that have occurred but haven’t been reported yet
Example: Used to help predict total insurance liabilities.
Unearned premium
The part of the premium that applies to the time left on a policy that hasn’t been used.
Example: If you cancel a 1-year policy after 3 months, you could get a refund for the remaining 9 months.
Earned premium
The part of the premium that the insurer has already earned for the time the policy has been active.
Example:After 6 months of a 1-year policy, half the premium is earned.
Unearned premium reserve
A fund holding the unused portion of premiums for future coverage.
What is general insurance?
Insurance for property loss and other non-life risks.
What does property insurance cover?
Damage or loss to property from events like fire or explosion, plus lost income.
What is casualty insurance?
Covers risks like liability, theft, and certain business guarantees.
