What is Insurance? Flashcards
_____________ is a financial tool that protects individuals and organizations from unforeseen and extraordinary financial losses by transferring risk to another party.
Insurance
The _____________ purchases an insurance policy.
Insured
The _____________ provides financial protection to the insured.
Insurer
The insured pays a _______________ to the insurer in exchange for paying for specific losses if they occur.
Premium
Insurance works by spreading risk over a large group by collecting premiums that go into a _________ or ___________.
Pool; Reserve
After filing a claim, the insured becomes a _____________.
Claimant
Insurer pays for ________________ out of the pooled premiums.
Claims
Pooled premiums should always be enough to cover ______________.
Losses
The Principle of _________________ states that when a loss occurs, the insured should be restored to approximate previous financial condition; no more, no less.
Indemnity
_________________ may include payment for repairs to property, reimbursement for additional living expenses, rental cars, hotels, costs directly associated with a loss, as allowed under the policy.
Indemnification
A legally binding insurance contract is made of ____ parts.
4
What are the 4 parts of a legally binding insurance policy contract?
- Agreement
- Consideration
- Competent Parties
- Legal Purpose
The agreement is a.k.a. ___________ and _____________.
Offer & Acceptance
Agreement is the mutual _______________ between the offeror and offeree.
Consent
What are the three pieces to acceptance criteria?
- Offeree communicates to offeror intent to enter into contract.
- Must be unconditional- the offeree accepts terms proposed by offeror.
- Original offeree is only person who can accept legal offer.
