Module 1-A - What is Insurance Flashcards

1
Q

Insurance

A

A financial tool that transfers risk of unexpected, catastrophic losses from one party to another

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2
Q

Indemnify

A

To restore by payment, repair or replacement

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3
Q

Indemnification

A

Reimbursement for a loss, which leaves the claimant in the same financial position that they were in before the loss

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4
Q

Indemnity Insurance

A

Insurance that indemnifies losses as opposed to liability

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5
Q

Agreement

A

Characteristic of a legal contract.
All parties must agree on the terms of the contract

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6
Q

Consideration

A

One of the four qualifications of a legally binding contract.
All parties must bring
something of value to the contract.

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7
Q

Contract

A

An agreement entered into voluntarily by two parties or more with the intention of
creating a legal obligation.

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8
Q

Insurance Company

A

Company which sells insurance policies to individuals or to other companies.

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9
Q

Insurance Policy

A

A contract wherein an insured pays premiums to an insurer in exchange for financial
protection in the event of a covered loss.

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10
Q

Insured

A

A person or entity who is covered under an insurance policy.

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11
Q

Insurer

A

The person or entity providing coverage to one or more insureds.

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12
Q

Loss

A

Bodily injury, property damage, or damage caused by the insured’s negligent acts; loss
is the the basis for an insurance claim. Loss can also mean the sum the insurer will
have to pay.

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13
Q

Policy Holder

A

Also called the “insured”, a policyholder is a person who has purchased an insurance
policy—or contract—from an insurer.

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14
Q

Premium

A

A scheduled and affordable fee, paid by the policyholder to the insurer, in return for
coverage.

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15
Q

Principle of Indemnity

A

when a loss occurs, the
insured should be restored to his or her financial condition before the loss occurred, no
better, no worse. The insured cannot profit from a loss.

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