Fundamentals of Insurance - Self Exam with Complete Solutions

Main purpose of Insurance - Allow the spread of risk Definition of Insurance - -Payment's made only when a certain peril has damaged the insured object -Payment's limited to actual amount of loss, no more and no less -There's no payment for losses that are deliberately caused by an insured. Five important points to the definition of insurance: - -Spread of Risk -Basis of Credit System -Eliminates Worry/Encourages Entrepreneurship -Loss Prevention and Loss Reduction -Source of Employment and Investment Capital Five important points as they relate to the definition of insurance: - -Provides a means of shifting one's financial responsibility for loss to another party -Payment made only in the event of the happening of a certain risk or peril -Payment restricted to amount required to indemnify insured -Covers losses to which the object of insurance 'may' be exposed -Indemnity can be in the form of money or other thing of value Three types of insurance included within the broad area of 'Property and Casualty Insurance': - -Auto Insurance