Chapter 25&26 Flashcards
its a method for spreading individual risk among a large group of people to make losses more affordable for all -
insurance
its the uncertainty as to as fiancial loss, increased by perils and hazards -
risk
under the policy, the insurer agrees to assume an indentified risk for a fee, called the ….
premium
premiums are usually paid at regular intervals by the ………… of the policy (……)
owner
policyholder
in insurer collects ……… from policyholders under the assumption that only a few policyholders will have financial losses at any given time -
insurance premiums
3 insurable risks -
personal
property
liability
personal risks have to do w/ …..
life, health, disability
property risks have to deal w/ …….
fire, theft, wind, rain, accident, natural disaster
liability risks have to deal w/ ……
car accidents, personal injuries, business mistakes
its an insurable risk where you are responsible; can be sued
liability risk
risk management process - 3 steps -
identify risks of loss
assess seriousness of risks
handle risks
pure risk- insurable (……) -
accidental
speculaative risk - not insurable (…..) -
stocks
3 ways to handle risks -
risk avoidance
risk reduction
risk assumption
5steps in making a risk-management plan -
increase deductibles purchase group insurance consider payment options look for discount opportunities comparison shop
if property is damaged, insurance will pay -
property risk
it means you can be sued
-you are at the risk of being sued -
liability risk
homeowners insurance covers ….
physical damage coveragge
theft and vandalism coverage
liability coverage
2 automobile insurance -
cost of automobile insurance
types of automobile insurance coverage
cost of automobile insurance (6) -
model, style, age of car driver classification location distance driven purpose ofdriving age/sec of other drivers oof the car
7 types of automobile insurance coverage -
liability collison comprehensive personal injury protection (pip) uninsure/underinsured motorist no-fault insurance assigned-risk policies
collision coverage -
something you run into
it covers things that are not covered by collision -
comprehensive
when you get in an accident & the people dont have inurance, your insurance will kick in -
uninsured/ underinsured motorist coverage
2 umbrella liabilty insurance -
personal catastrophe policy
supplements ur basic auto&propert liability coverage
what to do after auto accident -
be prepared -alert traffic -hv a pen and card immediately after accident -stay calm -check forinjuries move car to safe place -turn hazards on -call police -notify insurance
It doesn’t matter who’s at fault, each person will pay their own losses -
No fault insurance
T or F
Do not sign documents unless it’s for the police or your insurance agent
True
Make immediate …. about the accident
Notes
Be……, don’t be mean or screaming
Polite
State only the …..
Facts
If possible, don’t ….. the accident
Leave
A method for spreading individual risk among a large group of people to make losses more affordable for all
Insurance
A risk that may result in either a gain or loss
Speculative risk
Putting the policyholder back in the same financial condition he or she was in before a loss occurred
Indemnification
The chances of loss or harm to personal or real property
Property risk
A chance of loss with no chance for gain
Pure risk
A financial Interest in life or property
Insurable interest
The chances of loss that may occur when your errors or actions result in injuries to others or damage to their property
Liability risk
A risk that may result in gain or loss because of changing economics conditions
Economic risk
What is the purpose of insurance
Can reduce negative consequences of a pure risk by purchasing insurance
- method for spreading individual risk
Its a risk that lot of people face
Insurable risk
Its an event whose occurrence can cause a loss
Peril
Its. Condition that creates or increases tthe likelihood of some loss
Hazard
Lowering your chance of loss by not doing high-risk activities
Risk avoidance
Transferring risk by buying insurance to cover potential losses
Risk shifting
An organized strategy for controlling financial loss from pure risks and insurable risks
Risk management
Taking measures to lessen the frequency of severity of losses that might occur
Risk reduction
The specified amount of a loss that you will have to pay
Deductible
Understanding the types of risk you will face and their potential consequences
Risk assessment
Accepting the consequences of risk by self-insuring to absorb the loss
Risk assumption
This is an ex of….
Instead of having a party at your house and risking damage, rent out a hall.
Risk of avoidance
This is an ex of….
You may put studded snow tires on your car, wear a seat belt
Risk of reduction
This is an ex of..
You own a car and buy auto insurance
Risk assumption
This is an ex of…
Buying insurance to cover fire, theft,injury, or death
Risk shifting
Changing your deductible reduces your insurance premium by …..
If u accept a higher deductible
How can u reduce your overall automobile insurance premium costs-
Set a higher deductible
Park in garage
