P & C Insurance

  1. What is Insurance?
    Transfers the risk of loss from an individual or business entity to an insurance company, which in tern spreads the cost of unexpected losses to many individuals.
  2. What is the "Law of Large Numbers"?
    The larger number of people with a similar exposure to loss, the more predictable actual losses will be.
  3. What is Insurable Interest?
    The insured would incur a financial loss if the insured property was damaged
  4. What are the 3 elements of Insurable Risk?
    1. Financial (a monetary interest)

    2. Blood (a relative); and

    3. Business (a business partner)
  5. In property and casualty insurance; when must insurable interest exist?
    at the time of loss
  6. What is a risk?
    The uncertainty or chance of a loss occurring.
  7. How many types of risk are there?
    1. Pure Risk

    2. Speculative Risk
  8. What is Pure Risk?
    Refers to situations that can only result in a loss or a changeĀ  with no opportunity for financial gain.

    **Pure Risk is the only type of risk insurance companies are willing to accept.
Card Set
P & C Insurance
Property and Casualty Insurance terminology