General Insurance Concepts
Risk vocabulary
Insurance transfers pure risk (loss or no loss); speculative risk (chance of gain) is not insurable. A peril is the cause of loss (fire, windstorm); a hazard is a condition that increases the chance or severity of loss -- icy steps are a physical hazard, arson for profit is a moral hazard, and leaving keys in an unlocked car is a morale hazard (carelessness). Adverse selection (attracting the worst risks) is controlled through underwriting, and the law of large numbers makes pooled predictions credible.
The contract
Policies are contracts of adhesion (the insurer drafts; ambiguity is construed against the drafter), aleatory (unequal exchange of values), unilateral (only the insurer makes an enforceable promise), conditional, and of utmost good faith. Valid-contract elements: offer, acceptance, consideration, legal purpose, competent parties. Policy anatomy: declarations, insuring agreement, conditions, exclusions, definitions, endorsements.
Liability foundation
Negligence requires duty, breach, proximate cause and damages. Defenses include contributory negligence (a complete bar where it survives), comparative negligence (reduces the award), and assumption of risk. Strict/absolute liability and vicarious liability (employer responsible for employee acts) impose liability without personal fault.
Traps
Do not confuse property coinsurance (a percentage-of-value clause) with a health insurance copay. Representations are believed true; warranties are guaranteed. Subrogation supports indemnity and never lets an insured recover twice for the same loss. Appraisal resolves valuation disputes; arbitration resolves coverage/liability disputes.
Rule of thumb
Test every scenario with three questions: who is the insured, what peril caused the loss, and did insurable interest exist when required? Property interest must exist at the time of loss; life insurance interest at application.