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39 Cards in this Set
- Front
- Back
Loss exposure
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any condition or situation that presents a possibility of loss, whether or not an actual loss occurs |
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Risk Management
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The process of making and implementing decisions that will minimize the adverse effects of accidental losses on an organization
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Loss prevention
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A risk control technique that reduces the frequency of a particular loss
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Loss reduction
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A risk control technique that reduces the severity of a particular loss
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Exposure unit
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A fundamental measure of the loss exposure assumed by an insurer |
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Property-casualty insurance
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One of the two main sectors of the insurance industry, encompassing numerous types of insurance, most of which cover the financial consequences of damage to one's own property or legal liability to others.
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Life-health insurance
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One of the two main sectors of the insurance industry, encompassing numerous types of insurance that cover the financial consequences of death, injury, or sickness.
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Utmost good faith
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An obligation to act in complete honesty and to disclose all relevant facts.
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Contract of adhesion
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Any contract in which one party must either accept the agreement as written by the other party or reject it.
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Contract of indemnity
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A contract in which the insurer agrees, in the event of a covered loss, to pay an amount directly related to the amount of the loss
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Self-contained policy
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A single document that contains all the agreements between the insured and the insurer and that forms a complete insurance policy
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Modular policy
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An insurance policy that consists of several different documents, none of which by itself forms a complete policy
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Property insurance
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Any type of insurance that indemnifies an insured who suffers a financial loss because property has been lost, stolen, damaged or destroyed.
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Liability insurance
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Insurance that covers losses resulting from the insured's liability to others
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Homeowners policy
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Policy that covers most of the property and liability loss exposures that arise out of residential property ownership and occupancy, as well as property and liability loss exposures that individuals and families may have while they are away from their residences.
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Personal liability coverage
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Coverage for damages, plus costs of any defense, related to a claim or suit brought against the insured that resulted from bodily injury or property damage caused by an occurrence covered under the policy
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Personal auto policy (PAP)
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An insurance policy that covers an individual or a family against loss exposures arising out of the ownership, maintenance, or use of automobiles.
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Comprehensive coverage
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Coverage for direct and accidental loss or damage to a covered auto by any peril except collision or overturn or a peril specifically excluded
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Personal watercraft policy
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An insurance policy that covers an individual's or a family's loss exposures arising out of the ownership, maintenance, or use of watercraft used principally for recreational or personal transportation purposes
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Umbrella liability policy
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A liability policy that provides excess coverage above underlying policies and may also provide coverage not available in the underlying policies, subject to a self-insured retention.
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Liability coverage
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Coverage that protects the insured from damages owed because of legal liability to another party. For auto policies, it protects insureds against liability arising out of the ownership or operation of automobiles.
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Term life insurance
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Life insurance that provides coverage for a specified period, such as ten or twenty years, with no cash value
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Permanent life insurance
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Life insurance designed to remain in force for an insured's entire life and provide a death benefit at death, characterized by the presence of a cash value
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Long-term care insurance
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Insurance that pays for extended medical care or custodial care received in a nursing home, hospital or home
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Annuity
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A type of life insurance policy or contract that makes periodic payment tot he recipient for a fixed period or for life in exchange for a specified premium
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Commercial package policy (CPP)
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Policy that covers two or more lines of business by combining ISO's commercial lines coverage parts
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Commercial auto insurance
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Insurance that covers a business or a not-for-profit organization against loss exposures arising out of the ownership, maintenance, or use of automobiles
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Businessowners policy (BOP)
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A package policy that combines most of the property and liability coverages needed by small and medium-size businesses.
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Auto physical damage coverage
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Coverage for damage to or theft of a covered auto that can include both collision coverage and other collision (comprehensive) coverage
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Commercial property insurance
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Insurance that covers commercial buildings and their contents against various types of property loss.
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Ocean marine insurance
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Insurance that covers vessels and their cargoes, including various vessel-related liability exposures.
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Inland marine insurance
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Insurance that covers many different classes of property that typically involve an element of transportation
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Commercial crime insurance
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Insurance that covers 1) money and securities against numerous perils (not limited to crime perils) and 2) property other than money and securities against crime perils, such as employee theft, robbery, theft by outsiders and extortion
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Commercial general liability (CGL) insurance
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Insurance that covers many of the common liability loss exposures faced by an organization, including its premises, operations and products.
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Professional liability insurance
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Insurance that covers persons engaged in various occupations against liability resulting from their rendering or failing to render professional services
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Workers compensation insurance
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Insurance that provides coverage for benefits an employer is obligated to pay under workers compensation laws
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Six Characteristics of an Ideally Insurable Loss Exposure |
1) Pure risk (not speculative) 2) Fortuitous losses - subject to fortuitous loss from the insured's standpoint 3) Definite and measurable - definite in time, cause, and location and are measurable 4) Large number of similar exposure unites 5) Independent and not catastrophic 6) Affordable |
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Benefits of insurance (8)
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1) Pay for losses 2) Manage cash flow uncertainty 3) Comply with legal requirements 4) Promote risk control activity 5) Efficient use of insured's resources 6) Support for insured's credit 7) Source of investment funds 8) Reduce social burden |
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Costs of insurance (4)
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1) Premiums paid by insureds 2) Operating costs of insurers 3) Opportunity costs 4) Increased losses |