MCS 2100 Lecture Notes - Lecture 8: Dead Bolt, Fire Extinguisher, Vehicle Insurance

• School: University of Guelph
• Department: Marketing and Consumer Studies
• Course: MCS 2100
• Professor: May Aung

Document Summary

You purchase insurance to control the effects of uncontrollable financial risk inherent to life and living (and for that matter even death). Insurance is protection against possible financial loss. An insurance company, or an insurer, is a risk-sharing firm that agrees to assume financial responsibility for losses that may result from an insured risk. A person joins the risk-sharing group by purchasing a policy (a contract) Under the policy, the insurance company agrees to assume the risk for a fee (the premium) that the person (the insured, or the policyholder) pays periodically. Risk is the chance that something may be lost. Peril is the cause of a possible loss. Hazard increases the likelihood of loss through some peril, for example defective house wiring is a hazard that increases the likelihood of the peril of fire. Personal risks are the uncertainties of loss of income or life due to premature death, illness, disability, old age, or unemployment.