Introduction Insurance EXAM GRADED A LATEST VERSION 300 QUESTIONS AND ANSWERS

Introduction Insurance EXAM GRADED A LATEST VERSION 300 QUESTIONS AND ANSWERS the uncertainty or possibility of financial loss. There are two kinds: - CORRECT ANSWER risk - speculative and pure risk chance of financial loss with possibility of gain or loss. this is not insurable. Ex: gambling - CORRECT ANSWER speculative risk chance of financial loss with no possibility of gain. the only potential outcome is loss - CORRECT ANSWER pure risk unintended unforeseen damage or injury measurable in financial terms - CORRECT ANSWER loss the actual cause of a loss. the reason the loss occurred Ex: tornado - wind - CORRECT ANSWER peril anything that increases the liklihood (frequency) of a loss occurring or the severity of a loss. - CORRECT ANSWER hazard what are the 3 types of hazard - CORRECT ANSWER 1) physical hazard: arises form material or structural features. Ex: icy road / oily rags 2) moral hazard: arises from morality or ethics of insured. Ex: arson / fraud 3) morale hazard: arises from human carelessness or irresponsibility. Ex: cell phone / garage door risk management - CORRECT ANSWER is the process of 1) identifying exposure to risk and 2) deciding how to handle the financial risk. the four risk management techniques (options) are? - CORRECT ANSWER 1) Reduce: reduce the risk by lowering the exposure, ie loss control 2) Retain: assume the risk, ie self-insure or deductible 3) Avoid: eliminate the risk, ie do not engage in the activity 4) Transfer the financial risk through the purchase of insurance insurance - CORRECT ANS