Adverse selection refers to a scenario in the insurance industry where individuals more prone to filing claims are more likely to seek insurance coverage, leading to potential imbalances for insurance providers.
Insurance is a system whereby individuals and companies concerned about potential hazards pay premiums to an insurance company, which reimburses (in whole or part) them in the event of loss. The insurer profits by investing the premiums it receives. Some common forms of insurance cover business risks, automobiles, homes, boats, worker's compensation, and health. Life insurance guarantees payment to the beneficiaries when the insured person dies. In a broad economic sense, insurance transfers risk from individuals to a larger group, which is better able to pay for losses.
An insurance policy is a contract between an insured person or entity and an insurance company, specifying the risks covered and the premiums that must be paid to maintain the policy. It serves as the reference document to determine coverage eligibility for claims.
An insuring agreement in a liability insurance policy outlines the obligations of the insurer to provide coverage for specific risks or events that may result in a claim against the insured.
Liability insurance provides protection from claims arising from injuries or damage to other people or property. It is essential for motor vehicle, home, and business owners. Business liability insurance premiums are deductible.
The statute of limitations is a law that sets the maximum time within which parties involved in a legal dispute must initiate legal proceedings from the date of an alleged offense or claim.
