Exam Fx Insurance Terms and Related Concepts | 37 Question and Answers (A+ guide solution)

Insurance - Transfers risk of loss from an individual or business to a company Law Of Large Numbers - States that the larger # of people with a similar exposure to loss, the more predictable the losses will be Insurable Interest - The insured would become subject to financial loss if the insured property was damaged. 3 Elements Of Insurable Risk - * Financial (monetary interest) *Blood (relative) *Business (business partner) Risk - Uncertainty or chance of loss occurring. Pure Risk - Situations that can only cause loss and no gain Speculative Risk - Opportunity for either loss or gain Perils - Causes of loss insured against in an insurance policy Hazard - Conditions of situations that increase risk of insured loss occurring. Indemnity (sometimes called reimbursement) - Permitted to collect only to the extent of financial loss, is not allowed to gain financially because of the existence of insurance contract.