>>>>>>>> Appendix B Insurance and Risk Management f o t p e c n o C Th e Risk • Risk is uncertainty about loss or injury • A typical business faces a variety of risk: – Fire – Burglary – Water Damage – Storm Damage – Accidents – Judgments from Lawsuits – Natural Disasters Ri s k t n e m e g a Man • Avoiding Risk • Reducing Risk • Self-Insuring Against Risk • Shifting to an Insurance Company Insurance – contract by which the insurer for a fee agrees to reimburse the insured a sum of money if a loss occurs Premium – amount paid by the insured to the insurer to exchange for insurance coverage e c n a r u s n I c i Bas s t p e c n Co • Insurable Interest – an applicant must demonstrate a direct financial loss will result if some event occurs • Insurable Risk – the requirements that a risk must meet in order for the insurer to provide protection • Rule of Indemnity – the insured cannot collect more than the amount of the loss • The Law of Large Numbers – statistical probabilities that seemingly random events will follow predictable patterns f o s e Sourc e c n a r u Ins e g a r e Cov • Public Insurance Agencies – Unemployment Insurance – Worker’s Compensation – Social Security • Private Insurance Companies – Prudential – State Farm – Geico f o s e Typ e c n a r I n su • Property and Liability Insurance – – – – Homeowner’s Insurance Auto Insurance Commercial and Business Insurance Liability Insurance • Health and Disability Insurance – Managed Care Plans • HMO and PPO – Disability Income Insurance • Life Insurance – Term Policies – Whole Life and Universal Life ...f o t p e c n o C Th e Risk • Risk is uncertainty about loss or injury • A typical business faces a variety of risk: – Fire – Burglary – Water Damage – Storm Damage – Accidents –... • Property and Liability Insurance – – – – Homeowner’s Insurance Auto Insurance Commercial and Business Insurance Liability Insurance • Health and Disability Insurance – Managed Care Plans •