Insurance and Risk Management
Insurance is based on the principle of shared risk.
The chance of something happening within a certain number of occurrences.
Law of averages
The larger the group/ number of events analyzed, the more accurately events can be predicted.
Rates are higher for teens than other demographics, because you are more likely (statistically) to have as accident than an adult with more driving experience.
Smokers are likely to pay higher rates, as they have more health problems (cancer & heart disease) that are not hereditary.
This is why agents will ask a series of questions to make sure you are put into the correct group.
A formal request to an insurance company asking for a payment based on the terms of the insurance policy.
The total amount and type of insurance carried.
A specified amount of money that the insured must pay before an insurance company will pay a claim.
A practice by which a company provides a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a premium.
An insurance policy is a legally binding contract between an insurance company and the person who buys the policy, commonly called the “policyholder”, who also is often the person insured.
Insured (or policyholder)
The person, group, or property for which an insurance policy is issued. The condition of having insurance.
A person or company that underwrites an insurance risk; the party in an insurance contract undertaking to pay compensation.
The state of being responsible for something, especially by law.
An amount to be paid for an insurance policy.
Being aware of the risks involved and taking precautions for financial protection.
Taking measures to lessen the frequency or severity of losses that may occur.
Buying insurance to shift the risk of financial loss to an insurance company.
Eliminating the chance for loss by not doing the activity that could result in the loss.