Our main goal at Slater All Lines Insurance School is to teach our students the information they need to pass the Washington State Insurance Producer Exam. This is Part 1 of our new Insurance Exam Sneak Peak series. We want to provide students with an inside look at some of the topics covered in our Insurance Exam Classes.
Insurance is designed to transfer the financial impact of a loss from an individual or company to an insurance company. In exchange for the protection (agreement of indemnification) of the insurance company, an insured must pay premiums.
- Property and Casualty Insurance Contracts are indemnification contracts. Indemnification means to restore a person to his or her original position before the loss, with no gain.
- Property Insurance indemnifies a person or business who has an interest in physical property for the loss or the loss of income-producing abilities.
- Casualty Insurance, often referred to as Liability Insurance, indemnifies for a wide variety of losses caused by an insured to a third party. Casualty Insurance includes Commercial Liability, Auto, Workers’ Compensation, Crime, Surety (Bonds), etc.
- Law of Large Numbers: Risks are usually not considered insurable unless the insurance company has a large enough number of similar risks and a large enough base of previous loss experience to be able to accurately predict future losses. It is the law of large numbers that makes accurate predictions of group losses possible. The larger the number of risks, the more predictable the number of losses becomes.