Insurance Chapter 2
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Created by:
solomon_matt on October 12, 2011
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15 terms
Terms | Definitions |
|---|---|
 Insurance | Pooling of fortuitous losses by transfer of such risk to insurers, who agree to indemnify insureds for such losses, to provide pecuniary benefits on their occurrence, or to render services connected with the risk |
| Payment of Fortuitous Losses | Insurance pays for losses that are unforeseen, unexpected, and occur as a result of chance |
| Risk Transfer | A pure risk is transferred from the insured to the insurer, who typically is in a stronger financial position |
| Indemnification | The insured is restored to his or her approximate financial position prior to the occurrence of the loss |
| Adverse Selection | is the tendency of persons with a higher-than-average chance of loss to seek insurance at standard rates |
| 2 Types of Insurance | 1. Government Insurance (Social insurance, Other Gov't insurance) 2. Private Insurance (Life and Health, Property and Liability) |
| Life Insurance | Pays death benefits to beneficiaries when the insured dies |
| Health Insurance | covers medical expenses because of sickness or injury |
| Disability Plans | pays income benefits |
| Property Insurance | Indemnifies property owners against the loss or damage of real or personal property |
| Liability Insurance | covers the insured's legal liability arising out of property damage or bodily injury to others |
| Casualty Insurance | Refers to insurance that covers whatever is not covered by fire, marine, and life insurance |
| Private Insurance | Can be categorized into two major categories: 1. Personal Lines 2. Commercial Lines |
| Personal Lines | Coverages that insure the real estate and personal property of individuals and families or provide protection against legal liability |
| Commercial Lines | Coverages for biz firms, nonprofits, and gov't agencies |
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