General Insurance Flashcards
Insurance
Managing risk by transferring it from the policyholder to the insurance company.
Insurer
The insurance company who issues the policy to the named insured.
*The principal
NamED Insured
the policyholder
•The owner of the insurance contract who hold the rights and responsibilities
InsurED
Not the holder
A person who is covered by an insurance policy but is not necessarily named
Principle of indemnity/indemnification
•Insured is returned to their pre-loss state
*To make whole and not profit
Insurable interest
- Having a financial stake/interest in property.
* Legal and substantial economic interest in property at the time of loss
Occurrence
An occurrence is an accident and includes continuous and repeated exposure to the same Injurious conditions.
Long-term/overtime
Continuous
Risk
The chance, uncertainty or possibility of loss.
Types of risk
Speculative-risk A chance of loss or gain
Pure risk/absolute loss
The chance of loss without the chance of gain.
Example: auto insurance/pure risk
Peril/Cause of loss
The reason the loss occurred
Loss
An event that causes an economic or financial hurt
Direct loss
Physical destruction to property caused by a peril
when you see it
And direct/consequential loss
An economic loss caused by a direct loss
Examples:
- A rental car after an auto accident*
- A hotel/living in a trailer after a tornado destroyed a house*
- meals at a restaurant following a kitchen fire*
- Lost rental income when a tenant does not pay rent due to a covered loss*
Hazard
A condition that increases the likelihood/chance of a loss occurring
