Law of Large Numbers
the more examples used to develop any statistic, the more reliable the statistic will be
Underwriting
The process and
... [Show More] insurance company uses to decide whether to except or reject an application for a policy insurance. underwriters evaluate the risk and exposure of a potential policyholders they decide how much coverage the policyholder should receive how much they should pay for it or whether even to except the risk and insure them. underwriting involves measuring risk exposure and determining the premium that needs to be charged to ensure that risk.
peril
A cause of property losses I.E, fire, lightning, explosion, windstorm, hurricane, collapse of building, vandalism, accidental discharge, theft.
hazard
Is a situation that poses a level of threat to life, Heath, property, or environment.
Direct loss
Direct physical loss to property
Indirect loss
A loss that arises as a result of damage to property, other than the direct loss to the property. If you own a taxi and someone totals out your taxi, you can't make money because you can't drive your taxi for fares.
Principle of indemnity
Insurance will not pay more than the cost of the incident
Property insurance
Covers the loss of real and personal property from perils such as fire, theft, windstorm
Insuring Agreement
Summarizes the major promises of the insurer in exchange for premium payments by their customer.
Deductible
Amount you must pay before you begin receiving any benefits from your insurance company
Cancellation
Termination of an insurance policy by insurance company or insurer before the renewal date. All notices must be done in writing.
Limit of Liability
The maximum amount for which an insurer is liable. The policy of declarations specifies limits.
Loss settlement
The process used to determine the amount of the loss.
Methods used to settle losses
Actual cash value- value of the property, based on the current cost to replace it, minus applicable depreciation.
Replacement cost- the cost associated with replacing property at current market prices.
Agreed value- the amount that the insured and insurer agree upon during the time of policy inception.
Market value- the amount the property is worth in a competitive market. This amount is accepted by the buyer and seller. [Show Less]