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Related Flashcards
Cards In This Set
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Insured
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"a person, a business, or an organization whose property, life, or legal liability is covered by an insurance policy"
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Insurer
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An insurance company
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Covered loss
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The events for which insurance pays
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Loss exposure (exposure)
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Any condition or situation that presents the possibility of a loss
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Law of large numbers
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"a mathematical principle stating that as the number of similar but independent exposure units increases, the relative accuracy of predictions about future outcomes (losses) based on these exposure units also increases"
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Exposure unit
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"a measure of loss potential and used in pricing insurance, i.e., in homeowners insurance, each home insured is an exposure unit"
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Property loss exposure
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Any condition or situation that presents the possibility that a property loss will happen
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Real property
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Consists of land as well as buildings and other structures attached to the land or embedded in it
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Personal property
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Consists of all tangible or intangible property that is not real property
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Net income
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Income (or revenue) minus expenses during a given period
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Liability loss exposure
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Any condition or situation that presents the possibility that a liability loss will happen
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Liability loss
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A claim for monetary damages because of injury to another party of damage to another party's property
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Human loss exposure (personal loss exposure)
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"any condition or situation that presents the possibility of a financial loss to an individual or a family by such causes as death, sickness, injury, or unemployment"
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Personnel loss exposure
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"the possibility of a financial loss to a business because of the death, disability, retirement, or resignation of key employees"
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Indemnify
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To restore a party who has had a covered loss to the same financial position that party held before the loss occurred
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