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Related Flashcards
Related Topics
Cards In This Set
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Exposure
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A unit of measurement used to determine rates charged for insurance coverage
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Homogeneous
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A large number of units having the same exposure to loss
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Risk
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The uncertainty or chance of a loss occurint
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Pure Risk
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Situations that can only result in loss or no gain
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Speculative Risk
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Involves the opportunity for loss or gain
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Avoidance
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Eliminating Exposure to Risk
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Retention
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Planned assumption of risk by the insured through use of deductables
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Sharing
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Method of dealing with risk where a group of individuals or buisness with the same or similar exposure to loss share losses that occur within the group
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Reduction
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Lessen the possibility or severity of a loss- Ex -install sprinker systems
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A-avoidance
R2-Retention & Reduction
T- Transfer
S- Sharing
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Ways of dealing with Risk
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Transfer
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Transfer risk so that loss is bourne by another party- Ex. Insurance
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Elements of Insurable Loss
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Must be:
1. Due to Chance 2. predictable 3. not catastrophic 4. exposure to be insured must be large 5. insurance must not be mandatory
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Loss
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The reduction, decrease, or disappearance of value of the person, or property
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Direct Loss
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Direct physical damage to buildings, and or personal property- unbroken chain of events, can cover other damage where the insured peril was the proximate cause of loss
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Insurance
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The transfer of financial responsibility associated with a potential of of a loss to an insurance company
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