RIBO Exam (Ch 1-4) Latest 2023 Graded A

RIBO Exam (Ch 1-4) Latest 2023 Graded A Insured A person or entity who purchases an insurance policy. 1st party Insurer The insurance company who issues an insurance policy. 2nd party Lessor a person or entity that grants a lease (bank) Lessee A person who purchases the lease Mortgagee A person or entity that provides a loan (bank) Mortgagor A person who borrows money Chinese Shippers -Around 2000 BCE -First group to demonstrate "risk mitigation" -They used to separate boats for each good -Implemented risk mitigation by scattering goods on each boat allowing to mitigate risk in case of loss Middle Age Peasants - First to implement a "communal pot" - First to implement "losses of the few shared by the many" The Great London Fire -Occurred in 1666 -Renters were forced to repay landlords for damage of fire to homes -Insurance business was created to avoid total loss for landlords and debtors jail for renters Insurance The underwriting by one person to indemnify another person against loss or liability for loss in respect of a certain risk or peril to which the object of insurance may be exposed, or to pay a sum of money or other thing of value upon the happening of a certain event. Insurance Breakdown: The undertaking by one person Shifting one's financial responsibility to another Insurance Breakdown: Indemnify to make whole again, no more; no less Insurance Breakdown: certain risk Risk must be a covered cause of loss Insurance Breakdown: the object of insurance may be exposed upon the happening Insurance only protects you from events that may happen in the future Insurance Breakdown: pay a sum of money or other thing of value The insurer has the right to settle the claim on the basis of repair, replacement, or a payout Risk A chance of financial loss occurring -split into Personal, Property and Liability Types of Risk Pure and Speculative Pure Risk There is only a chance for loss and no gain -Insurable Speculative Risk Potential for loss or gain -