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Insurance

Surety bond

In the world of finance, there exists a concept known as a surety bond. This is a legally binding agreement between three parties - the surety company, the owner or creditor, and the third party. The purpose of this bond is to ensure that the third party's obligations are fulfilled. This is especially relevant for contractors working on public projects, as they are often required to obtain a surety bond. In the event that the contractor fails to fulfill their duties, the surety company steps in and is held responsible for either completing the work or compensating for any losses up to the bond's penalty amount.

Asymmetric information

One important concept in the world of finance is an insured's knowledge of potential losses, which is not accessible to insurance companies. This understanding plays a cruci...

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Direct loss

An insurance term that refers to a loss that is a direct result of a series of connected events starting from an insured risk. In simpler terms, it means that the loss can b...

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Loss ratio

As an expert in finance, it is crucial to understand the concept of "loss ratio," which refers to the percentage of each premium rupee that an insurer spends on claims. This...

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Outstanding balance on loans

A crucial financial concept to understand is the loan balance, which refers to the remaining amount that a policyholder owes on a loan. This balance includes both the princi...

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