7/19/26, 12:57 PM Tennessee P&C Insurance Licensing Flashcards | Quizlet
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Tennessee P&C Insurance Licensing
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Flashcard sets Study guides
Tennessee P & C Insurance State La... Property & Casualty Tennessee Stat... P&C License Exam - Practice Test Q... Tennes
76 terms 98 terms 73 terms 54 terms
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Terms in this set (536)
Insurance is purchased to transfer the risk of loss
pure risk one that results in either a loss or no change
speculative risk may result in loss, gain, or no change
what type of risk is insurance designed to protect against pure risk -- no potential gain
loss reductio, decrease, or disappearance in value that affects someone's property or
financial standing
loss is the basis for a .... in an insurance contract claim
exposure the condition of being at risk for a loss
peril specific cause of a loss
hazard specific condition that increases the probability that a loss will occur from a peril
physical hazard often seen, heard, felt, smelled, tasted
moral hazard dishonest tendencies that increase likelihoood of loss; related to some form of
lying, cheating stealing
morale hazard an attitude of indifference toward the risk of loss that increases likelihood of loss
occuring
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, 7/19/26, 12:57 PM Tennessee P&C Insurance Licensing Flashcards | Quizlet
which hazard is not covered by a policy moral
acronym for managing risk STARR
risk sharing Distributing risk among multiple parties with similar loss exposures who agree to
cover each other for their losses
risk transfer shifting a risk to another party--> obtaining an insurance policy
risk avoidance elimination of risk by not participating in activities that involve a chance of loss-->
not always effective
risk reduction minimizing the risks we cannot completely avoid
ex. of risk reduction installing fire sprinklers
risk retention assuming responsibility for a loss
self-insurance company sets aside funds to pay potential loss relieving them from paying
premiums --> higher risk of financial loss
elements of insurable risk -large # of like units with comparable exposure to accurately predict future loss
- chance of loss must be statistically calculable, affordable premium
-loss must be uncertain, accidental
-loss must be measurable- definite in amt, cause, time, place
-loss must cause financial hardship
-catastrophic perils need to be excluded & illegal activities too
law of large numbers probability theory stating that the larger number of units with similar exposures,
the greater the accuracy in predicting losses --> helps insurer determine premium
adverse selection principle that people will seek insurance more frequently for risks that are hard to
insurer--> charge higher premium for less favorable risks or decline coverage
reinsurance used by insurers to spread their risk and limit the loss they will face in event of a
large claim
private insurers write on a for-profit basis--> operate through voluntary market, retaining right to
accept or reject business
residual markets Last-resort coverage for high-risk individuals.
stock insurance company This is an insurance company that's owned and controlled by a group of
stockholders (or shareholders) -- issue nonparticipating policies since
policyholders aren't entitles to dividends
mutual insurance company owned by policyholders, policyholders receive non-taxable dividends as a return
of unused premium when declared
https://quizlet.com/1066456933/tennessee-pc-insurance-licensing-flash-cards/ 2/7
Social Sciences Business Insurance Save
Tennessee P&C Insurance Licensing
Leave the first rating
Students also studied
Flashcard sets Study guides
Tennessee P & C Insurance State La... Property & Casualty Tennessee Stat... P&C License Exam - Practice Test Q... Tennes
76 terms 98 terms 73 terms 54 terms
allie_burgy Preview Dan_Hunt6 Preview lstough Preview rym
Terms in this set (536)
Insurance is purchased to transfer the risk of loss
pure risk one that results in either a loss or no change
speculative risk may result in loss, gain, or no change
what type of risk is insurance designed to protect against pure risk -- no potential gain
loss reductio, decrease, or disappearance in value that affects someone's property or
financial standing
loss is the basis for a .... in an insurance contract claim
exposure the condition of being at risk for a loss
peril specific cause of a loss
hazard specific condition that increases the probability that a loss will occur from a peril
physical hazard often seen, heard, felt, smelled, tasted
moral hazard dishonest tendencies that increase likelihoood of loss; related to some form of
lying, cheating stealing
morale hazard an attitude of indifference toward the risk of loss that increases likelihood of loss
occuring
https://quizlet.com/1066456933/tennessee-pc-insurance-licensing-flash-cards/ 1/7
, 7/19/26, 12:57 PM Tennessee P&C Insurance Licensing Flashcards | Quizlet
which hazard is not covered by a policy moral
acronym for managing risk STARR
risk sharing Distributing risk among multiple parties with similar loss exposures who agree to
cover each other for their losses
risk transfer shifting a risk to another party--> obtaining an insurance policy
risk avoidance elimination of risk by not participating in activities that involve a chance of loss-->
not always effective
risk reduction minimizing the risks we cannot completely avoid
ex. of risk reduction installing fire sprinklers
risk retention assuming responsibility for a loss
self-insurance company sets aside funds to pay potential loss relieving them from paying
premiums --> higher risk of financial loss
elements of insurable risk -large # of like units with comparable exposure to accurately predict future loss
- chance of loss must be statistically calculable, affordable premium
-loss must be uncertain, accidental
-loss must be measurable- definite in amt, cause, time, place
-loss must cause financial hardship
-catastrophic perils need to be excluded & illegal activities too
law of large numbers probability theory stating that the larger number of units with similar exposures,
the greater the accuracy in predicting losses --> helps insurer determine premium
adverse selection principle that people will seek insurance more frequently for risks that are hard to
insurer--> charge higher premium for less favorable risks or decline coverage
reinsurance used by insurers to spread their risk and limit the loss they will face in event of a
large claim
private insurers write on a for-profit basis--> operate through voluntary market, retaining right to
accept or reject business
residual markets Last-resort coverage for high-risk individuals.
stock insurance company This is an insurance company that's owned and controlled by a group of
stockholders (or shareholders) -- issue nonparticipating policies since
policyholders aren't entitles to dividends
mutual insurance company owned by policyholders, policyholders receive non-taxable dividends as a return
of unused premium when declared
https://quizlet.com/1066456933/tennessee-pc-insurance-licensing-flash-cards/ 2/7
