Introduction to Insurance/ Government & Insurance Regulations Test and Flashcards

Insurance

An undertaking by one party to indemnify another if a specific peril damages an object of insurance

AoI

Amount of insurance

On premises

the premise is stated on the declaration page of the policy

CoC

Course of Construction

Owned

Owned, rented, or leased or otherwise controlled

Vehicles

Includes watercraft's and other motorized vehicles and cars

Function of insurance

1. Spread risk: from the few to the many (most important) 2. premiums are used to pay losses 3. Insurers participate in loss prevention/reduction measures 4. Peace of mind: eliminates worry and allows people to take risk 5. Pay small fixed amounts to fend off large uncertain amounts 6. Supply Credit: Lenders won't lend for unprotected property 7. Source of jobs & capital: Insurers invest their premiums

Definition of Insurance

1. Agreement between the insurer and insured: to transfer risk 2. The insurer agrees to pay when a specific peril damages an object of insurance or when the insured causes loss to others. 3. Insurance pays only for accidental losses that happen after the agreement starts. 4. Principle of indemnity: the amount of claim = amount of loss based on the value of the object immediately prior to the loss 5. Payment can be in the form of cash or repairing/replacing the property

The law of large numbers

the larger the sample size, the more accurate your predictions

General Property and Casualty Insurance categories

1. Auto Insurance 2. Property: personal and business property 3. Liability: provides protection if legally responsible for causing injury or damage to 3rd party

Peril

A source of danger/a possibility of incurring loss or misfortune/a state of danger involving risk

Hazard

A source of danger; possibility of incurring loss or misfortune

Flashcards: Introduction to Insurance/ Government & Insurance Regulations