OTL – Study Guide and Certification Exam Preparation Material
insurance - ANS ✔✔A contract in which one party, the insurer, for monetary consideration
agrees to reimburse another, the insured, for loss or liability for a loss on a defined subject
caused by specified hazards or perils.
risk - ANS ✔✔The chance of loss. Specifically, the possible loss or destruction of property or the
possible incurring of a liability. Sometimes referred to as the subject of an insurance contract.
speculative risk - ANS ✔✔An insurance term for a situation where the possibility of either a
financial loss or a financial gain exists, such as in purchasing shares, or betting on horses.
Speculative risk is usually not insurable, unlike pure risk.
pure risk - ANS ✔✔A situation involving a chance of a loss, or no loss but no chance of gain.
peril - ANS ✔✔The event that caused a loss covered by the policy: for example, fire, windstorm.
fire - ANS ✔✔Combustion manifested in light, flame, and heat for useful purposes (friendly fire)
or destructive purposes (hostile fire).
negligence - ANS ✔✔Failure to use the degree of care expected from a reasonable and prudent
person.
hazard - ANS ✔✔(1) A risk or probability that the event insured against might Occur. (2) A
condition that engenders or increases the chances of a loss.
physical hazard - ANS ✔✔A hazard arising from the physical condition or characteristics of the
object that is insured.
, moral hazard - ANS ✔✔A hazard arising from the character, interest, habits, and lack of integrity
of the insured or person concerned.
underwriter - ANS ✔✔The individual whose responsibility it is to accept or reject business
morale hazard - ANS ✔✔A hazard that is based on the insured's attitude toward the insured
belongings. This hazard exists when the insured no longer cares about the possessions because
they are insured.
proximate cause - ANS ✔✔A cauese that, in a natural and continuous sequence unbroken by
any new and independent cause, produces an event and without which the event would not
have happened.
remote cause - ANS ✔✔A cause that is not the proximate cause of loss and is separate from the
proximate cause in a chain of events leading to a loss.
immediate cause - ANS ✔✔A cause that is not the proximate cause of loss but is the last link in
a chain of events leading to a loss.
indemnify - ANS ✔✔To provide compensation for loss or expenses incurred.
premium - ANS ✔✔The price of insurance protection for a specified risk for a specified period of
time.
agent - ANS ✔✔A person licensed and authorized or employed to act on behalf of another.
broker - ANS ✔✔A licensed independent person or firm who acts on behalf of an insured in
placing business with insurance companies.
insurance - ANS ✔✔A contract in which one party, the insurer, for monetary consideration
agrees to reimburse another, the insured, for loss or liability for a loss on a defined subject
caused by specified hazards or perils.
risk - ANS ✔✔The chance of loss. Specifically, the possible loss or destruction of property or the
possible incurring of a liability. Sometimes referred to as the subject of an insurance contract.
speculative risk - ANS ✔✔An insurance term for a situation where the possibility of either a
financial loss or a financial gain exists, such as in purchasing shares, or betting on horses.
Speculative risk is usually not insurable, unlike pure risk.
pure risk - ANS ✔✔A situation involving a chance of a loss, or no loss but no chance of gain.
peril - ANS ✔✔The event that caused a loss covered by the policy: for example, fire, windstorm.
fire - ANS ✔✔Combustion manifested in light, flame, and heat for useful purposes (friendly fire)
or destructive purposes (hostile fire).
negligence - ANS ✔✔Failure to use the degree of care expected from a reasonable and prudent
person.
hazard - ANS ✔✔(1) A risk or probability that the event insured against might Occur. (2) A
condition that engenders or increases the chances of a loss.
physical hazard - ANS ✔✔A hazard arising from the physical condition or characteristics of the
object that is insured.
, moral hazard - ANS ✔✔A hazard arising from the character, interest, habits, and lack of integrity
of the insured or person concerned.
underwriter - ANS ✔✔The individual whose responsibility it is to accept or reject business
morale hazard - ANS ✔✔A hazard that is based on the insured's attitude toward the insured
belongings. This hazard exists when the insured no longer cares about the possessions because
they are insured.
proximate cause - ANS ✔✔A cauese that, in a natural and continuous sequence unbroken by
any new and independent cause, produces an event and without which the event would not
have happened.
remote cause - ANS ✔✔A cause that is not the proximate cause of loss and is separate from the
proximate cause in a chain of events leading to a loss.
immediate cause - ANS ✔✔A cause that is not the proximate cause of loss but is the last link in
a chain of events leading to a loss.
indemnify - ANS ✔✔To provide compensation for loss or expenses incurred.
premium - ANS ✔✔The price of insurance protection for a specified risk for a specified period of
time.
agent - ANS ✔✔A person licensed and authorized or employed to act on behalf of another.
broker - ANS ✔✔A licensed independent person or firm who acts on behalf of an insured in
placing business with insurance companies.
