A method pay of compensation

1.Pay in cash. The method is simple, convenient and flexible.

2.Repair is an ideal way in the event of partial damage. And can be repaired back to original condition.

3.To find a replacement that is find things as the type and quality same of the property which insured to replace such as the broken glass just to buy a new glass.

4.Revivability Is to make property insurance restored to its original condition. As before the casualty which not possible to repair or replace, such as the bombing of destruction or on the fire. All it created a new to take advantage of it.

Actions of the insure which the insurance company has denied responsibility

1. Concealment or Non-discolsure is to conceal the truth. Or not to disclose the truth about the condition of the risk of certain disasters. This is the essence of the company If know the truth then. May not be guaranteed or may be a premium increase.

2. Misrepresentation is the insurance company ask to facts. This is usually a question to appear in the insurance application. And the insured representation is false. If significant in assessing the risk of the company. Would cause the company has denied liability.

3. Warranty is a guarantee or agreement of the insured. It is a condition that the insurer is required to ensure that strict. Failure to comply with the certification. That the insurance company denied liability under the contract.

main point subject matter of insurance must disclose and conceal.

Fact that the subject matter insured must disclose


            Is necessary to determine the effect of the insurer. That will guarantee Or deny the warranty. It is important to consider, including the premium rates


1.The actual text. When exposed to show that. Property that would have insured the risk was higher than originally understood as an insured the building for a forest fire up close. Or in the direction of the ventilator  

2.The fact that the risk is more common, such as the building is keeping dangerous thing in that building.

3.The actual text when disclosure will show is conceal intended to assurer such insurance exceed value of the property insured.

4.The truth about the assured. such as in automobile insurance. The applicant to drive a motor car accident in the past so often.

Fact that the subject matter insured must conceal

1.Fact that the risk is reduced.

2.Fact that companies can do themselves or should have known of the events in the past.

3.Fact that be evident apparent already in the public eye.

4.Fact that about the law which one will claim that I do not know the rules.

5.Fact that the company should be diagnosed. Taken from the query and to answer questions. Fully insured by the applicant, such as life insurance announced that has a headache. It is the duty of the company will have to decide whether I'll have to check the body of the insured or not. To determine the cause of those symptoms.

Criteria for determining premium rates insurance

The premium rate just as the prices of basic goods. Is to find a cost and expenses (the cost of the work, services, taxes, duties, brokerage fees) plus a margin based on the following criteria. 

1. The size of the risk. The size of the vulnerable of high insured. The premium will be higher to calculate a fair premium. It is a hierarchy of risk based on the size of the disaster risk in the insured object, such as in fire insurance. We divide the order of risk to appearance of the building. The building is divided into one class,two classes, third class, and also take into account. The location of the property and the use of such property.

2.Period of time covered insurance against loss. Most life insurance premium rates are set annually. If you buy coverage period shorter than one year. Premium rates will be higher because some costs are fixed, use it as an annual insurance premium is 100% if the insurance premiums for six months,insurance premium 62% etc. 

3.Sum insured If the insured amount. Premium is over insured amount is less.  

Risks could be and not be insured.

Risks could be insured.

1.A number of risks then have style and condition similar needs to be enough.

2.Danger or risk. Will be realized.

3.Danger or risk not intending to be a disaster occurs.

4.Disaster occurs must not be a disaster, including Catastophe or serious disasters such as earthquakes. This disasters will break the law of large numbers.

5.Risk must not be too small for insurance losses such as insurance losses with only one eye glasses. This is just a little. It is not worth the time and labor costs have been.

6.The cost of the insurance shall not be higher than usual. Premium rate it includes 2 components parts: the pure premium with other expenses include a gain. If the real premium have a little and most other expenses. It was not worth the cost to policyholders.


Risks that may not be insured.

Occasionally, we may hear wording everything can be insured. In fact be not. The following risks that it may not be insured.

1.Lack of statistics such as retail and fashion can not be insured for damage caused by a sudden change in fashion.

2.Risk as oppose to benefit of the public, such as motorists can not be insured to cover the penalty in case lawbreaker of traffic rules.

3.The risk is too much risk such as the war is the responsibility of the government to pay compensation.

Faced with the risk for insurance

Humans may be exposed to risk. Many ways. This may be divided into 5 categories.

1. To avoid the risk.  It is the easiest way however, in practice it is hard as if we do not want to risk an accident on the highway so we did not leave

2.The risk itself. This could happen by be benighted as shop owners have fire insurance to shop. But not insured for loss of income or the profits. When shop on fire as the lack of income etc.

3. To reduce the causes of disasters, such as when it is very young children and play matches. It may hide match to it away from children

4.To reduce or limit losses. This is a way to prevent the loss of progression or spread to the other, such as installing water pipes onto the ceiling of the building. To help extinguish the fire

5.To transfer risk or death threats to others that the insurance company itself. The threat to the insurance company will guarantee it will be a disaster to happen less but a huge loss.

Risk with insurance

Risk means uncertainty about the risk of loss, such as collide with cars and larceny or home is vulnerable to fire, etc.

Type of risk.
1. Speculative Risk is the risk that events could be the catalyst to fall under the risk of profit or loss such as stock exchange which may have a gain or loss. The risk of this type can not be assured.

2. Pure Risk is the risk of loss or damage. This could happen or not happen at every house as it is possible to fire. But not necessarily the only or not. The risk is the risk within the meaning of this type of insurance. The risk of this type are prone to be insured.


Peril means a cause of loss such as fire, windstorm, lightning, accidents, disasters, etc. Which do not know in advance is uncertain. Once the damage has already occurred.

Hazard means anything that would cause a disaster. Or enhance the losses from disasters such as machines, with no fence around it that the workers may have been injured or lost.

Hazard have 3 reasons

1.Physical Hazard is the cause of the disaster or by the nature of the property or the environment, for example, the manufacture of gunpowder in the building. Increases the chance of loss resulting from the explosion.

2.Moral Harzard the cause of the disaster or the conditions that increase the frequency. Or severity of loss due to habit. Or dishonesty of the insured committed fraud, such as the assured arson property insurance for a security deposit etc.

3.Morale Hazard is the cause of the disaster caused by the mind or consciousness are not insured to take care of their own assets, such as books, stacks of paper under my stairs. This will increase the chance of loss due to the increasing threat.

Theory of Probability and Law of Large Number of insurance

Theory of Probability

This theory is calculate chance that one event. They occur in a number of times that the total

Insurance company will use main of the Theory of Probability with static total losses in the past as to predict that the future how will be a loss to calculate insurance premium. Be charged from the assured for enough pay compensation when disasters occur in the future as for insurance

Law of Large Number or Law of Average

The fact Principles if observed event or experiments event have more. The probability have more accuracy as well, so the insurers to get as close to the number of events that will occur. Must rely on a number of risks increased. To reduce the size of the uncertainties that this rule can be considered as the heart of the insurance.

Principles of insurance

Insurance is a lot of people have agreed to co-pay. Or mitigate the damage that any one group may have been a fund set up to collect funds or called "Insurance Premium" All members of your fund. The Fund will make payments to members who suffer damage.

 Insurance is not meant to prevent a disaster, but the promise that if there is damage caused by the disaster. People who have been damaged will not be such a disaster. The other group members to assist victims of disasters that have the same return.