General Insurance

„ Auto Insurance p rovides property and liability insurance coverage for the following   personal automobiles: • Private Passenger • Pick up Trucks • Trailers • Golf Carts • Snowmobiles • Motorcycles Auto insurance coverage can be: Auto Liability coverage Bodily Injury – Covers the medical expense of the passenger or the person in the car that insured hits. Property damage – covers the damaged vehicle of the victim. Unauthorized motorist BI (UMBI) – If insured is met with an accident and fault is with another driver with no insurance then it will cover the medical expense, cost of damage for you. Under insured motorist BI (UNDBI) -  If insured is met an accident with another person at fault and his insurance is not sufficient to cover your loss, this coverage will cover for the difference in the expense No-Fault Insurance (PIP) - Each driver collects from their own insurance company for medical expenses, lost wages, and related injury costs. Aut...

Declarations-  Information page that provides specific details about the insured and the subject of insurance. Definitions-   This section defines terms that have specific meaning with regard to the coverage provided. Insuring agreements-  This is a statement that the insurer will, under certain circumstances, make a payment or provide a service. Exclusions -  These are policy provisions that eliminate coverage for specific exposures. Conditions -  These are conditions related to the coverage provided. Miscellaneous provisions-  Contain provisions that do not qualify as one of the components described above.

Insured - Person/Persons covered in insurance policy Insurer - insurance company Insured property - Property covered in insurance policy in case of property insurance Agent -   I ndividual who sells and services insurance policies in either of two classifications:    Independent agent represents at least two insurance companies    Direct or career agent represents only one company and sells only its policies. Broker -   Insurance salesperson that searches the marketplace in the interest of clients, not insurance companies. Casualty Insurance -   That type of insurance that is primarily concerned with losses caused by injuries to persons and legal liability imposed upon the insured for such injury or for damage to property of others. It also includes such diverse forms as plate glass, insurance against crime, such as robbery, burglary and forgery, boiler and machinery insurance and Aviation insurance. Many casualty companies also w...

Insurance can be understood as a • Transfer system – Transfers the chance of loss to another party – Sharing the loss by pooling the money and sharing the loss among all insured • Business – A set of operations that generate sufficient income to pay claims and yield profit to owners • Contract – Specifies the potential costs of loss that is being transfer from insured to insurer Insurance Company prefer to provide Insurance for the Financial consequences of Loss Exposures that possess Characteristics as: Large number of similar Exposure Units. Losses that are Accidental. That aren’t Catastrophic. Definite and Measurable. Economically Feasible to Insure

Insurance is driven by the following concepts and it is important for us to understand them: Law of Large numbers: As the number of similar but independent  Exposure units  increases the relative accuracy of predictions about future outcomes (Losses) based on these exposure units also increases. For example in Home Owner’s Insurance each Home insured is a Exposure Unit. Exposure Units such as cars and Houses are independent if they are not subject to the  same event.  Principle of indemnity: Insurance is a process of covering the potential losses by providing a financial security to insured persons by bringing them back to the same position before the loss happened. A person cannot be benefited out of the insurance transaction.  This happens by collecting a small amount called as premiums from a large pool of people with similar exposure and the losses are compensated when there is an unexpected loss for one of the insured.

Four basic risk management techniques are Avoidance -  Whenever an organization/individual does not posses the capacity to handle the risk while ensuring a high degree of safety, it should choose avoidance as a risk management technique. Loss Control/Risk Reduction-  Loss Prevention &  Loss Reduction Ø Retention -  This is used when either the organization/individual possesses the capacity to face the consequences of risk or has no other option to mitigate risk. Risk Transfer-   Risk sharing involves sharing risk with another organization through a contract.  Guess what type of risk management technique is insurance!!! „

        “Understanding insurance is about understanding the concept of risk i.e.  uncertainty of economic loss ” „ What is Risk?   „ Chance or probability of loss „ Forward looking (future oriented) „ Can’t know for sure until realized „ Nature of Risk „ Pure Risk:  outcomes could be Loss/ No  Loss. „ Speculative Risk:  outcomes could be Loss/No  Loss/Gain. E.g. Stock market investment „ Insurable Risks (Only Pure Risks and Not Speculative) „ Personal Risk : Illness, bodily injury, disability, death etc. „ Property Risk : Encompasses own or possessed assets „ Direct – Risk of loss caused by a fire in a owned home „ Indirect – Risk of loss of rental income from fire in a rented property „ Liability Risk : Results from law of liability , state statute or case law „ Peril  is the cause of a possible loss, such as fire, windstorm, robbery, disease, or death. „ Hazard  increases the likelihood of a lo...

„ Insurance History       Insurance is not a new concept. History of Early insurance goes back to the Egyptian times. It was known that around 3000 BC, Chinese merchants dispersed their shipments among several vessels to avoid the possibility of damage or loss. There are some insurance companies around today in the United States that provided insurance back in the mid 1700’s, as well as some that provided relief to banks during the 1930’s and the Great Depression. „ How did insurance originate? „   The concept of insurance rose with the steam of coffee houses in the 13th  century. Ship owners wanted to insure their ships and cargo  against loss at sea.  The concept was to spread the chance of financial loss among a large number.  If 200 ships go out and 180 come back,  premiums  from the 180 are used to help reimburse the 20 that didn't quite make it.   "We can't save the sinking ship, but we can help keep the co...