Flashcards

prinipals of insurance

auktobherrhianne English 16 cards

Cards in this deck (16)

1perilcause of loss
2riskchance of loss
3hazardincreases the loss
4physical hazardhazard that arises from the condition occupancy or use of the property itself EX skateboard left on the steps
5morale hazardan individual through careless or irresponsible actions can increase the possibility of a loss
EX drives car carelessly without a seatbelt because they know they will be insured if accident occurs
6moral hazarda person might create a loss just to collect from the insurance company
EX faked a theft of an older car so he can collect and buy a new one
7avoid risknever getting into a car
8retain riskif a risk ever occurs they will pay for it themselves
9transfer risklike buying insurance
10control riskinstalling a sprinkler system in the building in case of a fire
11law of large numbersthe law of large numbers says that the more examples use to develop the more reliable the statistic will be
12pure riskloss only
13speculative riskgain and loss
14insurable interestHave a chance of finical loss or interest in the property
You have insurable interest in your house not your neighbors
15spread of riskinstead of insuring every person in town a company will want to insure several people in many towns
the greater spread of risk the less likely that there will be a catastrophic loss for the insurance company
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