Important Words & Phrases (Insurance Company)

Important words in Insurance Company

Insurer

Insurer

 An insurer is the company or person who promises to reimburse
 Every corporation, partnership, or association, duly authorized to transact insurance business as elsewhere provided in Insurance Code

Insured (Assured)

The one who receives the payment, except in the case of life insurance, where payment goes to the beneficiary named in the life insurance contract.

Risk

Uncertainty concerning loss

Peril

The cause of loss; a loss producing agent like fire, lightning, earthquake, collision, computer breakdown, typhoon, etc.

Hazard

Condition that tends to create or increase the chance of loss from a given peril. Ex.: low lying areas, storing flammable materials within building, open sided buildings, defective signal/tail lights

Physical Hazard

Objective characteristics that increase the chance of loss Ex. manufacturer of combustible goods

Moral Hazard

Subjective characteristics of the Insured. Ex. dishonesty, credit standing, past losses

Morale Hazard

Characterized by carelessness or indifference to loss because of insurance coverage. Ex. Poor housekeeping, lack of loss prevention

Contract of Insurance

An agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event

Policy

The written instrument in which a contract of insurance is set forth

Premium

Is the consideration paid by the insured—usually annually or semiannually—for the insurer’s promise to reimburse.

Insurance

A social device which combines the risks of individuals into a group, using funds contributed by members of the group to pay for losses.
 A device for reducing risk by combining a sufficient number of exposure units to make their individual losses collectively predictable. The predictable loss is then shared proportionately by all units in the combination
 Insurance is defined as a contract, which is called a policy, in which an individual or organization receives financial protection and reimbursement of damages from the insurer or the insurance company. At a very basic level, it is some form of protection from any possible financial losses.