Front
Risk
Back
The uncertainty of financial loss
Example: The possibility that a house might burn down.
Public Deck
Property & Casualty Insurance License Prep
Study for your P&C insurance license with 50 flashcards covering property, liability, auto, and insurance regulations.
AnyFlashcards50 cards
Preview
Front
Peril
Back
The specific cause of a loss
Examples: Fire, windstorm, hail, or theft.
Front
Hazard
Back
A condition that increases the likelihood or severity of a loss
Example: Storing oily rags near a furnace (Physical Hazard).
Front
Pure Risk vs. Speculative Risk
Back
Pure risk involves only the chance of loss; Speculative risk involves the chance of gain or loss
Insurance only covers pure risks, not gambling or stock investments.
Front
Law of Large Numbers
Back
The principle that larger groups make future losses more predictable
Used by actuaries to calculate accurate premium rates.
Front
Indemnity
Back
Restoring the insured to the same financial position as before the loss
The insured should not profit from an insurance claim.
Front
Insurable Interest
Back
A financial stake in the property being insured
Must exist at the time of loss for property and casualty insurance.
Front
Subrogation
Back
The insurer's right to seek recovery from a third party responsible for the loss
Prevents the insured from collecting twice for the same loss.
Front
Contract of Adhesion
Back
A contract drafted by one party (insurer) where the other party (insured) must 'take it or leave it'
Ambiguities in the contract are usually resolved in favor of the insured.
Front
Utmost Good Faith
Back
The assumption that both parties provide full and fair disclosure of all material facts
A fundamental principle required for a valid insurance contract.
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