Florida ACA Claims Licensing Exam with complete and correct solutions

Insurance transfer of risk by contract to insurers who agree to indemnify insureds for losses Risk chance of loss pure risk only outcomes are loss or no loss personal risk premature death, insufficient income, poor health, unemployment property risk loss of real property or personal property (on the land not the land itself) Liability risk something that results in loss to another (3rd party buyout) Controlling risk risk management; minimal loss speculative risk either profit or loss is possible (NOT insurable) indemnify compensate for loss, damage, or injury; reimburse; repay Law of Large Numbers must have a large pool of insureds to be able to predict losses so that the outcomes will reflect the probability of the results Direct loss Results from the damage, destruction, or theft of property by a covered peril indirect loss a financial loss that results from the occurrence of a direct physical damage or theft loss When can there be a pay out on liability risk negligence is proven negligence failure to use due care; otherwise known as the prudent person rule Strict or Absolute Liability Liability assigned by statute without regard for negligence (set by the state or industry, no allowable defense) Indemnity Principle one should be in approximately the same position after a loss as he was before the loss Insurer A person or company that underwrites an insurance risk; the party in an insurance contract undertaking to pay compensation. Insured one who is named or covered by insurance