Management and Organizational Studies 2275A/B Study Guide - Uberrima Fides, Insurance Broker, Liability Insurance

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 2275A/B
• Professor: Henry Meredith

Document Summary

After studying this chapter, you should have an understanding of: the role of insurance in risk management the nature of an insurance contract, including the rights and obligations of the insurer and the insured the various kinds of insurance. Insurance is one of the simplest and most cost-effective ways of managing risk in a business environment. It permits the business to shift such risks as fire, automobile accidents, and liability for defective products onto an insurance company in exchange for the payment of premiums by the business. An insurance contract is a contact of utmost good faith. This means that the insured must make full disclosure at the time of applying for insurance, as well as during the life of the policy. Failure to so may permit the insurer to deny coverage when a loss has occurred. The insured must have an insurable interest in the item insured to prevent moral hazards.