Unit 6 - Insurance Basics

Liability

Legal responsibility to pay someone who has suffered an injury or loss caused by another

insurance

purchased protection that guarantees to pay you in the event of certain specified losses

policy

The written agreement between a consumer who purchases insurance and the insurance and the insurance company

exclusion

Specific risks not covered by an insurance policy

endorsement

An attachment to a standard insurance policy that adds or takes away from coverage (also known as a rider)

premium

Payments insured people make to the insurance company in exchange for coverage

claim

A request made by the holder of an insurance policy for payment of a loss

deductible

A set amount an insured person must pay per loss before the insurer will pay benefits

depreciation

loss in value over time

limits

the maximum an insurance company will pay on a claim

Risk Pooling (Loss Sharing)

When a large group of people spread a risk for a small certain cost. It transfers risk from an individual to a group.