Chance of loss Example: When you own an automobile you can only loose if it is wrecked.
Ways to Deal with Risk: 1. Avoid 2. Reduce 3. Transfer/Sharing
1. Don't do it 2. Taking Percautions 3. Have someone else take the risk (aka Insurance Co.) by doing this you are sharing the risk with the other insureds of that Co.
Loss Of Use
A form of inderect loss resaulting from the inability to use a piece of property. Example: You will suffer a financial loss if you have to go rent a car while yours is being repaired.
1. Property to: 2. Liability (casualty):
1. To What, From What 2. By you the "other guy" always gets the money
What is Insurable Interest
A position to loose money
Indemnify
To make an insured financially whole. To restore to original financial condition but not better off then their original financial condition. (Make whole not rich)
Limit of Liability
The 3 L's
Lower of the Loss or Limit
Exclusions
Losses that the policy specifically states are not covered by the contract.