social device for spreading the chance of financial loss among a large # of ppl.
Insurance Company -insurer
receives relatively small amts of $, referred to as premium, from each of the large number of ppl buying ins.
a large, uncertain loss is traded in this way for a small, certain loss, the premium.
agreement b/t the insurer and the insure, the person who is covered by the ins.
insurer promises to pay the insured according to the terms of the policy if a loss occurs. defined as a reduction in the value of an asset.
to be paid for a loss, the insured must notify the insurer by making a
is the possibility (uncertainty) that a loss might occur and is the reason that ppl buy ins.
such as gambling creates a risk situattion and offers the opportunity for gain as well as the possibility of loss. It is this type of risk that ins won't cover.
is the type of risk that insurers accept. there is a the possiblity that a certain event will occur , ex. accident or sickness.
Purpose of Insurance
to restore the insured to his or her original position, not to provide a person with opportunity of making a profit on an accident or sickness.
is defined as somthing that increases the risk, or chance of loss.
Harzard such as a dead tree next to your house that could blow over during the next windstormc ausing damages to your roof.
harzard such as presented by a dishonest client who intentionally damages their own property.
harzard such as presetned by a careless client,or one with no pride of owership in their property.
defined as a cause of loss, such as fire, lighting, wind,etc. some property ins. policies are named perils, except for those excluded.
generaly defined as a reduction in the value of the insured property caused by an insured peril, such as fire.