USAA Licensing Exam

Insurance - ans-Transfer of risk from one person or organization to an insurance company Indemnity - ans-The principle to restore the insured to the pre-loss economic or financial condition. Law of Large numbers - ans-Mathematical principle used by insurers to predict losses to charge the appropriate premiums Insurable Interest - ans-Proof that someone stands to lose financially if a loss occurs; must exist at the time of the loss in property and casualty insurance Binder - ans-Temporary insurance contract; commits the company to act as if a policy has been issued Peril - ans-Cause of loss Direct Loss - ans-Immediate actual physical damage to tangible property Indirect loss - ans-Inability to use property as a result of a direct loss Risk - ans-Chance of loss; uncertainty of loss What are the two types of risk? - ans-Speculative and Pure Speculative Risk - ans-Involves the simultaneous chance of gain or loss: is not insurable