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12 Cards in this Set
- Front
- Back
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Hazard |
A condition or situation that creates or increases a chance of loss. |
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Loss |
Is the unintentional decrease in the value of an asset due to a peril. |
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Peril |
An immediate, specific event which causes loss, such as an earthquake or tornado. Perils can also be referred to as the accident itself. |
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Risk |
The potential for loss. |
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Speculative risk |
A risk that presents both the chance for loss or gain. Speculative risks are NOT insurable. |
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Speculative risk |
A risk that presents both the chance for loss or gain. Speculative risks are NOT insurable. |
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Pure risk |
In the only insurable risk and present a potential for loss, such as injury, illness, and death. |
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Law of large numbers |
The larger the amount of exposures that are combined into a group, the more certainty there is to the amount of loss incurred in any given period. |
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Homogeneous exposure units |
Are similar objects of insurance that are exposed to the same group of perils. |
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Principal of indemnity |
Involves making an insured whole by restoring them to the same condition as before a loss. |
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Human life approach |
A method of determining the financial value of a persons life based on computing the current value of a persons future earnings for a certain period of time. |
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Needs based value approach |
A method of determining a persons financial value based on the amount of money needed for current and future expenses. |
