Ains 21 Section A Chapter 1

Front 1

Loss exposure

Back 1

any condition or situation that presents a possibility of loss, whether or not an actual loss occurs

Front 2

Risk Management

Back 2

The process of making and implementing decisions that will minimize the adverse effects of accidental losses on an organization

Front 3

Loss prevention

Back 3

A risk control technique that reduces the frequency of a particular loss

Front 4

Loss reduction

Back 4

A risk control technique that reduces the severity of a particular loss

Front 5

Exposure unit

Back 5

A fundamental measure of the loss exposure assumed by an insurer

Front 6

Property-casualty insurance

Back 6

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.

Front 7

Life-health insurance

Back 7

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.

Front 8

Utmost good faith

Back 8

An obligation to act in complete honesty and to disclose all relevant facts.

Front 9

Contract of adhesion

Back 9

Any contract in which one party must either accept the agreement as written by the other party or reject it.

Front 10

Contract of indemnity

Back 10

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

Front 11

Self-contained policy

Back 11

A single document that contains all the agreements between the insured and the insurer and that forms a complete insurance policy

Front 12

Modular policy

Back 12

An insurance policy that consists of several different documents, none of which by itself forms a complete policy

Front 13

Property insurance

Back 13

Any type of insurance that indemnifies an insured who suffers a financial loss because property has been lost, stolen, damaged or destroyed.

Front 14

Liability insurance

Back 14

Insurance that covers losses resulting from the insured's liability to others

Front 15

Homeowners policy

Back 15

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.

Front 16

Personal liability coverage

Back 16

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

Front 17

Personal auto policy (PAP)

Back 17

An insurance policy that covers an individual or a family against loss exposures arising out of the ownership, maintenance, or use of automobiles.

Front 18

Comprehensive coverage

Back 18

Coverage for direct and accidental loss or damage to a covered auto by any peril except collision or overturn or a peril specifically excluded

Front 19

Personal watercraft policy

Back 19

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

Front 20

Umbrella liability policy

Back 20

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.

Front 21

Liability coverage

Back 21

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.

Front 22

Term life insurance

Back 22

Life insurance that provides coverage for a specified period, such as ten or twenty years, with no cash value

Front 23

Permanent life insurance

Back 23

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

Front 24

Long-term care insurance

Back 24

Insurance that pays for extended medical care or custodial care received in a nursing home, hospital or home

Front 25

Annuity

Back 25

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

Front 26

Commercial package policy (CPP)

Back 26

Policy that covers two or more lines of business by combining ISO's commercial lines coverage parts

Front 27

Commercial auto insurance

Back 27

Insurance that covers a business or a not-for-profit organization against loss exposures arising out of the ownership, maintenance, or use of automobiles

Front 28

Businessowners policy (BOP)

Back 28

A package policy that combines most of the property and liability coverages needed by small and medium-size businesses.

Front 29

Auto physical damage coverage

Back 29

Coverage for damage to or theft of a covered auto that can include both collision coverage and other collision (comprehensive) coverage

Front 30

Commercial property insurance

Back 30

Insurance that covers commercial buildings and their contents against various types of property loss.

Front 31

Ocean marine insurance

Back 31

Insurance that covers vessels and their cargoes, including various vessel-related liability exposures.

Front 32

Inland marine insurance

Back 32

Insurance that covers many different classes of property that typically involve an element of transportation

Front 33

Commercial crime insurance

Back 33

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

Front 34

Commercial general liability (CGL) insurance

Back 34

Insurance that covers many of the common liability loss exposures faced by an organization, including its premises, operations and products.

Front 35

Professional liability insurance

Back 35

Insurance that covers persons engaged in various occupations against liability resulting from their rendering or failing to render professional services

Front 36

Workers compensation insurance

Back 36

Insurance that provides coverage for benefits an employer is obligated to pay under workers compensation laws

Front 37

Six Characteristics of an Ideally Insurable Loss Exposure

Back 37

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

Front 38

Benefits of insurance (8)

Back 38

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

Front 39

Costs of insurance (4)

Back 39

1) Premiums paid by insureds

2) Operating costs of insurers

3) Opportunity costs

4) Increased losses