Important Words & Phrases (Insurance Company)

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Important words in Insurance Company

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12 Terms

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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

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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.

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Risk

Uncertainty concerning loss

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Peril

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

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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

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Physical Hazard

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

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Moral Hazard

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

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Morale Hazard

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

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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

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Policy

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

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Premium

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

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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.