PRM - Principles of Risk Management Module Overview
Principles of Risk Management Module Overview
Introduction
Insurance is to protect yourself against risk. What risk, you might ask? It is the chance that something negative may happen to you, your property, or your family. Each of us take risks every day with the simplest decisions and actions. You could walk down a flight of stairs that have ice from a winter storm or ride your bike on a busy street. Regardless, the goal should be to minimize the risk and make sure we have taken steps to prevent the risk from costing us everything. Your financial plans should include safeguards that will protect your finances from losses. In this module, you will learn what a risk is, how to transfer that risk to protect your finances, and steps to avoid losing your insurance.
Essential Questions
- What is risk management?
- How can an individual transfer risk?
- Why do insurance rates vary?
- How do I reduce the cost of my insurance?
- How can my insurance policy get cancelled?
- Why do I need to take inventory of items in my home?
Key Terms
Insurance: promised payment for specific future losses should they occur in exchange for a payment called a premium
Insurer: a company that pays to compensate the policyholder for losses or damages as described in an insurance policy as long as the premium is paid
Insurance policy: a written contract between an insurer and a customer (the policyholder) describing the term of the insurance, what is covered, the cost of the premium and the deductible amount
Policyholder: the owner(s) of an insurance policy - the policyholder must be insurable
Risk: the probability that something negative may happen
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