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Key Terms Quiz
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Match the following term to its definition.
1


risk

2


speculative risk

3


pure risk

4


selfinsurance

5


uninsurable risk

6


insurable risk

7


insurable interest

8


insurance policy

9


premium

10


claim

11


law of large numbers

12


rule of indemnity

13


stock insurance company

14


mutual insurance company

A)The chance of loss, the degree of probability of loss, and the amount of possible loss.
B)A risk that no insurance company will cover.
C)A written contract between the insured and an insurance company that promises to pay for all or part of a loss.
D)Rule saying that an insured person or organization cannot collect more than the actual loss from an insurable risk.
E)The threat of loss with no chance for profit.
F)A statement of a loss that the insured sends to the insurance company to request payment.
G)A chance of either profit or loss.
H)A risk that the typical insurance company will cover.
I)Principle that if a large number of people are exposed to the same risk, a predictable number of losses will occur during a given period of time.
J)The fee charged by an insurance company for an insurance policy.
K)A type of insurance company owned by its policyholders.
L)The possibility of the policyholder to suffer a loss.
M)A type of insurance company owned by shareholders.
N)The practice of setting aside money to cover routine claims and buying only "catastrophe" policies to cover big losses.







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