Definition of "Hedging"
Method of transferring risk to permit the risk bearer to assume two offsetting positions at the same time so that, regardless of the outcome of an event, the risk bearer is left in a no win/no lose position. For example, in the options market, a stock owner of an underlying stock can write calls or buy puts. In the same options market, the short sellers of the underlying stock can buy calls or write puts.
Popular Insurance Terms
Physical damage to one's person. The purpose of liability (casualty) insurance is to cover bodily injury to a third party resulting from the negligent or intentional acts and omissions of ...
Interest earned on dividends from a participating life insurance policy left on deposit with the insurance company and subject to taxation. ...
Error, misstatement, or breach of duty by an officer or director of a company that results in a lawsuit against the company. directors and officers liability insurance covers claims arising ...
Policies that have been sold to and paid for by an insured, but not yet delivered to the insured. ...
Option in a participating policy under which dividends are used to purchase fully paid-up units of whole life insurance. This option deserves careful consideration by young families since ...
Acts or omissions that result in suits against an individual and/or residents of the individual's household for actual or imagined bodily injury and/or property damage to a third party. ...
Intense combustion resulting in a flame or glow. In order for the fire peril to be covered under property insurance, the fire must be a hostile fire, not a friendly fire. ...
Yearly renewable term (YRT) life insurance under which an insured can usually re-apply for term insurance every fifth year at a lower premium than the guaranteed renewal rate. If the ...
Provisions added to an original insurance policy that alter or modify benefits and coverages of the contract. For example, a homeowners insurance policy can be endorsed to cover a ...
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