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13 Cards in this Set
- Front
- Back
Insurance
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Sharing, spreading, or transferring risk through the accumulation of funds of large numbers of individuals. Giving up a known certain loss in order to avoid a larger potential loss. A contract where one party agrees to indemnify another for a certain stated contingencies
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Risk
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Chance of a loss
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Avoidance
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Not doing the thing that puts the client at risk. This is often not possible. ex: most adults must drive a car
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Reduction
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Reducing the things that make a loss more likely. ex: Correcting conditions on a property that might cause a fire
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Retention
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Keeping the risk and not trying to transfer it. ex: Deductible
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Transfer
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Risk can be transferred to someone else through contracts
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Peril
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The direct cause of a loss
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Hazard
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Something that increases the chance of loss
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Physical Hazards (environmental)
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Conditions in property (such as faulty wiring) that increase the chance of peril (cause of loss)
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Morale Hazards
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An attitude of "not caring" about the property. This attitude makes it more likely for loss to occur
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Moral Hazards
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A situation in which someone might illegally try to destroy their own property for financial gain. ex: arson
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Legal Hazards
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A court ruling that causes an unexpected liability and the general increased tendency of people to sue. ex: teachers being sued because a child doesn't learn to read
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Insurable Interest
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A legitimate financial interest in the life or property being insured for which there is a chance of loss
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