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
Minimum of care owed by one party for the physical safety of another. Liability suits are brought because of negligent acts and omissions resulting from failures to exercise due care. ...
Professional designation earned after the successful completion of six national examinations given by the insurance institute of America (IIA). Covers such areas of expertise as ocean ...
Need for an insurance policy to be paid up or to be paid for a minimum number of years before the insured is eligible to receive any benefits. This requirement is typically found in ...
Same as term Deviated Rate: rates used by a property and casualty insurance company that are different from that suggested by a rating bureau. An insurance company may use deviated rates ...
Tort liability, which is defined by law, requiring an injured party to prove only that he or she was harmed in a specified way in order to collect damages. For example, the law provides ...
Liability and physical damage coverage for trailers under business or personal auto policies. Most automobile insurance policies offer liability coverage for common types of trailers owned ...
1945 federal legislation in which the Congress declared that the states may continue to regulate the insurance industry. Nevertheless, in recent years Congress has expanded the federal ...
Futures contracts based on automobile and health reinsurance policies to be traded on the Commodity Future Exchange of the Chicago Board of Trade. The purpose is to allow insurance ...
Policy covering an insured's property at several different locations. This coverage is used by business firms that have several locations and may move property from location to location. ...
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