BU231 Chapter Notes - Chapter 16: Liability Insurance, Property Insurance, Term Life Insurance
Document Summary
In the first type of risk no one can be held responsible if the loss was caused by a storm (act of god) or if it were caused by another person. Legal proceeds are likely to be expensive in this case, which is why it is avoided to bring to court. In the second type of risk, the third party liability is more open ended. It may be possible to estimate the cost of the of potential liability by comparing how many cars are being sold to what the % of defects found in inspection. One possibility to avoid risk is to set aside a contingency fund. An insurance policy is a document that provides written evidence of terms of an insurance contract. The premium is the price paid by the insured for the insurance coverage specified i the policy, the premium may be paid in a single sum or payments through the year.
