RMIN 5100S Chapter Notes - Chapter 1: Term Life Insurance, Retail Loss Prevention, Underwriting

• School: University of Georgia
• Department: Risk Management and Insurance
• Course: RMIN 5100S
• Professor: Atkinson

Document Summary

Insurance is defined as the transfer of risk from one entity to another. This is the transferring of risk of loss from an individual to an insurer. Contrast the term exposure with the term hazard. (reference: basic terms) Exposures are the actuals beings or things that could possibly be subject to a type of loss. Hazard is the conditions that actually make a loss more likely to occur or make the damage from loss much greater. Peril is simply defined as the cause of the loss. This is the actual element that caused a loss to occur. For example, if a car runs into a tree, the tree would be identified as the peril. Charlie is considering the purchase of a furniture business. He will own the building and its contents, creating risk of loss. There are several ways he may choose to handle this risk, including avoiding the risk altogether by not purchasing the business.