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15 Cards in this Set

  • Front
  • Back
Risk
Uncertainity regarding financial loss
Speculative Risk
There is a chance of loss, no loss, or a chance of gain
Pure Risk
There is a chance of loss or no loss
Exposure
Possibility of a loss
Law of Large Numbers
As the number of observations of an event increase, the closer the predicted outcome will be to the actual outcome.
Insurable Interest
Interest in the property that will result in a financial loss if the property is damaged or destroyed
Principal of Indemnity
Put someone back in the same general financial condition he was in before the loss. The principal of indemnity prohibits the insured from gaining from an insured loss
Peril
The actual cause of a loss
Hazards
situations that increase the chance of loss (frequency) or the size of the loss (severity)
Direct Loss
physical destruction or damage to property
Indirect Loss
financial loss that is incurred as a result of direct damage to property. Also called Consequential or Time Element losses
Proximate Cause
Uninterrupted sequence of events that produces a loss due to negligence, injury or damage.
Domestic Insurer
Insurance Company that is incorporated and formed under the laws of the state in which it is domiciled
Foregin Insurer
One domiciled and organized under the laws of one state but licensed to do businesses in another state
Alien Insurer
An insurance company formed under the laws of a country other than the United States