Chapter 1 Flashcards
indemnity
how much a person is allowed to collect on what they have lost
- will never profit from insurance
- puts you back in your original financial standing
commercial insurance
protects businesses and other organizations
insurance policy
document issued by insurance companies to their policyholders
- provides details of what is covered under the contract
insurance
a social and contractual device that transfers the risk of financial loss from the individual to the insurer
hazard
something that makes a peril more likely to happen
peril
cause of a loss
risk
uncertainty about an outcome
loss
decline in value
insurable interest
something that exists that is insurable and could incur a loss
2 majors of the industry
Property and casualty
Life and Health
cons of insurance
-can create situations where losses are more likely to occur
- people aren’t as careful
- consumption of resources
benefits of insurance
- reimburses people
- less worry and fear
- encourages activities and devices that minimizes loss (seatbelts)
Lloyds of London
An organization of individuals who insure large and unusual risks
fire mark
symbol placed on a building to signify that its insured
ben franklin
father of modern insurance
underwriters
person who pledges financial backing to a risk
