C.17 Principles of risk and insurance Flashcards

The possibility of loss or an uncertain financial outcome.

The process of identifying, evaluating, and mitigating financial risks.

A risk that meets certain criteria, making it suitable for insurance coverage.

A statistical principle stating that as the number of exposure units increases, the actual results become closer to the expected results.

The tendency of higher-risk individuals to seek more insurance coverage than lower-risk individuals.

When an insured person engages in riskier behavior because they have insurance coverage.

The amount an insured individual must pay out of pocket before the insurance company begins to cover a claim.

The concept that insurance should restore the insured to their financial position before the loss, without allowing them to profit.

The process insurers use to assess risk and determine coverage eligibility, premiums, and policy terms.