unit 5

Pure Risk

A chance of loss with no chance of gain.

Speculative Risk

A type of risk that results in either gain or loss.

Economic Risk

Risk that may result in gain or loss due to changing economic conditions.

Insurable Risk

A pure risk faced by a large number of people, for which potential losses can be predicted.

Personal Risk

The chance of loss involving your income and standard of living.

Property Risk

The chance of loss or harm to personal or real property.

Liability Risk

The chance of loss that may occur when your actions result in injuries to others or damage to their property.

Premium

The cost of potential future losses paid in exchange for regular fee payments.

Risk Management

An organized strategy for controlling financial loss from pure risks and insurable risks.

Risk Assessment

Understanding the types of risk you will face and their potential consequences.

Risk Shifting

Transferring risk by purchasing insurance to cover financial losses.

Risk Avoidance

Lowering the chance of loss by not engaging in potentially risky activities.

Risk Reduction

Lowering the chance of loss by taking steps to lessen the severity or frequency of losses.

Risk Assumption

Accepting the consequences of risk.

Deductible

The specified amount of a loss that you must pay before insurance coverage kicks in.

Renter’s Insurance

Insurance that protects renters from property and liability risks.

Homeowner’s Insurance

Insurance that protects property owners from property and liability risks.

Liability Coverage

Insurance to protect against claims for bodily injury to another person or damage to their property.

No-Fault Insurance

Automobile insurance where drivers receive reimbursement from their own insurer regardless of who caused the accident.

Umbrella Liability Insurance

Supplements basic auto and property liability coverage by exempting limits and covering additional risks.

Health Insurance

A plan for sharing the risk of high medical costs resulting from injury and illness.

COBRA

A law allowing people who leave employment to continue health insurance under the company plan for a limited time.

Group Policies

Health insurance policies where all insured individuals have the same coverage and pay a set premium.

Basic Health Insurance

Insurance that includes medical, hospital, and surgical costs.

Managed Care

Health insurance plans that rely on a network of health care providers.

Disability Insurance

Insurance that provides income protection in the event an individual is unable to work due to a disability.

Life Insurance

Insurance that pays out a sum of money upon the death of the insured.