Frequently Used Insurance Terms and About General Insurance

Frequently Used Insurance Terms 1. What is a "Risk"? Risk is nothing but a possibility of adverse results arising from any occurrence. Therefore Risk arises out of uncertainty. In Insurance business, the term risk is used to mean: either a peril to be insured against (fire is a risk to which property is exposed) or a person or property protected by insurance, (miners are not considered as good risk for accident insurance) 2. What is a peril? …

…not be catastrophic: If the insurer is insolvent, it will be unable to pay the insured. In the United States, there is a system of Guaranty Funds run at the state level to reimburse insured people whose insurance companies have become insolvent. To avoid catastrophic depletion of their own capital, insurers almost universally purchase reinsurance to protect them against excessively large accumulations of risk in a single area, and to protect them against large-scale catastrophes.