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Financial Management: Principles and Applications, 13/e
book

Financial Management: Principles and Applications, 13/e

by Sheridan Titman, Arthur J. Keown, John D. Martin
January 2017
Beginner
500 pages
147h 53m
English
Pearson
Content preview from Financial Management: Principles and Applications, 13/e

20.2 Managing Risk with Insurance Contracts

Insurance is defined as the equitable transfer of the risk of a loss from one entity to another in exchange for the payment of a premium. Consequently, insurance is a method for transferring risk from the firm to an outside party that is familiar to us all. Essentially, the insured exchanges the risk of a large, uncertain, and possibly devastating loss to an insurance company in exchange for a guaranteed, small loss (the premium).

Purchasing insurance transfers the risks covered by the insurance contract to the insurance company. Consequently, insurance offers one method that both companies and individuals can use to manage the risks that they face.

Types of Insurance Contracts

There are as many types ...

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Publisher Resources

ISBN: 9780134417219