MOS 2277 Chapter 8 questions and
answers graded A+ 2025
risk management alternatives - correct answer ✔✔1. avoid risk
2. reduce risk
3. accept risk
4. transfer risk to insurance company
what is insurance for? - correct answer ✔✔to maintain your existing level of wealth by
transferring risk to the insurance company because you either can't afford the loss or don't
want to suffer the loss
"self-insuring" - correct answer ✔✔when you don't want to buy insurance and you are covering
losses personally
your insurance goal - correct answer ✔✔buy ONLY the insurance you NEED for the LOWEST
price possible
Insurance is NOT an - correct answer ✔✔investment (it is a cost that should be minimized while
providing you protection you require)
How do insurance companies work? - correct answer ✔✔- they pool together different
insurance policies based on the type of insurance purchased and the characteristics of policy
owners
- majority of people will never file a major claim (so they keep the premiums)
, underwriters - correct answer ✔✔calculate the risk of specific insurance policies and decide
what policies to offer and premiums to charge
premium - correct answer ✔✔the cost monthly or annually
Premiums are higher if - correct answer ✔✔- risk of loss is likely and/or
- size of loss is larger
Premiums are lower if: - correct answer ✔✔- risk of loss is low and/or
- size of loss is low
three main types of auto insurance - correct answer ✔✔1. liability: mandatory and the main
factor of how much your insurance costs
2. collision (optional)
3. comprehensive (optional)
Liability Auto Insurance (in Ontario you MUST get insurance that covers these four items -
usually wrapped up in liability coverage) - correct answer ✔✔1. Third Party Liability
2. Direct Compensation - Property Damage
3. Uninsured Automobile Coverage
4. Accident Benefits Coverage
1. Third Party Liability (most important part of auto insurance) - correct answer ✔✔- insurance
that will financially protect you if you are responsible for an accident that causes injuries,
fatalities, or damages someones property
- minimum coverage is 200,000 which is risky, 1M is most common, 2M is preferred
answers graded A+ 2025
risk management alternatives - correct answer ✔✔1. avoid risk
2. reduce risk
3. accept risk
4. transfer risk to insurance company
what is insurance for? - correct answer ✔✔to maintain your existing level of wealth by
transferring risk to the insurance company because you either can't afford the loss or don't
want to suffer the loss
"self-insuring" - correct answer ✔✔when you don't want to buy insurance and you are covering
losses personally
your insurance goal - correct answer ✔✔buy ONLY the insurance you NEED for the LOWEST
price possible
Insurance is NOT an - correct answer ✔✔investment (it is a cost that should be minimized while
providing you protection you require)
How do insurance companies work? - correct answer ✔✔- they pool together different
insurance policies based on the type of insurance purchased and the characteristics of policy
owners
- majority of people will never file a major claim (so they keep the premiums)
, underwriters - correct answer ✔✔calculate the risk of specific insurance policies and decide
what policies to offer and premiums to charge
premium - correct answer ✔✔the cost monthly or annually
Premiums are higher if - correct answer ✔✔- risk of loss is likely and/or
- size of loss is larger
Premiums are lower if: - correct answer ✔✔- risk of loss is low and/or
- size of loss is low
three main types of auto insurance - correct answer ✔✔1. liability: mandatory and the main
factor of how much your insurance costs
2. collision (optional)
3. comprehensive (optional)
Liability Auto Insurance (in Ontario you MUST get insurance that covers these four items -
usually wrapped up in liability coverage) - correct answer ✔✔1. Third Party Liability
2. Direct Compensation - Property Damage
3. Uninsured Automobile Coverage
4. Accident Benefits Coverage
1. Third Party Liability (most important part of auto insurance) - correct answer ✔✔- insurance
that will financially protect you if you are responsible for an accident that causes injuries,
fatalities, or damages someones property
- minimum coverage is 200,000 which is risky, 1M is most common, 2M is preferred
