GA Claims Adjuster Test Terms with correct definitions

Risk In the insurance industry, risk can have two meanings: 1) the potential for financial loss; being exposed or open to damage, 2) an insured item. Risk Avoidance Insurers' practice of denying insurance applications that they believe would involve an inordinate amount of risk. 00:24 01:34 Risk Management Measures taken by an insurance company to ensure that their exposure is not too high and to control the effect of a loss; for example, an insurer might charge higher premiums to drivers who have received speeding tickets. Risk Purchasing Groups Groups of people with similar insurance needs who form an organization to buy insurance as a group. Risk, Pure Risk that does not entail the possibility of gain; the only possible outcomes are a loss or no loss. Risk Reduction An insurer practices _________________when it takes precautions in order to reduce its exposure; for example, requiring that all homes insured by a homeowners policy have fire alarms installed. Risk Retention An insurer practices ______________ when it chooses to insure a risk instead of denying coverage. Risk Retention Groups Groups where the members insure each other, using their own capital to write insurance policies. Risk, Speculative Risk that might result in gain, loss, or no change in circumstance (as opposed to pure risk, which does not include the possibility of gain). Insurance A financial device used by people and organizations to protect themselves from unexpected, extraordinary financial losses. It is a 2 party contract. Fire defined as "rapid oxidation accompanied by flame, spark, or glow." In order for a fire to be a covered cause of loss, it must also be "hostile" - that is, it must have gotten out of control and spread from where it was intended to burn, or it must have been started by accident in the first place. By Lightning is "an abrupt, discontinuous, natural electric discharge in the atmosphere." This does not include "power surges" or any damages from an electrical current that was generated artificially. 00:00 01:34 Explosion occurs when the pent up force of confined air or gas suddenly bursts into the open, and the violent release of pressure or energy causes an audible bursting or breaking. Windstorm Means any wind with enough force to damage property. Hail Precipitation in the form of spherical or irregular pellets of ice. Riot & Civil Commotion Refers to any violent public disorder, generally involving three or more people acting with a common intent to disturb the peace. Aircraft Also include spacecraft and self-propelled missiles. This peril would also cover property damage inflicted by motorized model or hobby aircraft.