Texas Surplus Lines Exam Prep EXAM (updated
2025) Questions & Answers | Latest Already
Graded A+ UPDATE 2025|2026
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Terms in this set (63)
Basic Risk and Loss Risk, Loss, Hazards, Perils, Exposure
Factors
The chance of loss and uncertainty. The term "risk"
also refers to the insured person, property, or activity.
Risk
A insured person, property, or activity is also known
as a "subject."
A loss is an unwelcome and unplanned reduction in
Loss
economic value.
The immediate result of an event caused by a covered
Direct Loss
peril.
Indirect Loss Loss that is a result or consequence of a direct loss.
Exposure The state of being subject to a possible loss
Destructive events that Insurance guards against.
Examples include:
Fire
Explosion
Peril
Windstorm (NS, W/H)
Flood
Theft
Collision
, A hazard is a condition that increases the likely
occurrence of a peril or the likely severity of a loss.
Hazard
There are 3 types of hazards (MMP): Moral, Morale,
and Physical.
Moral hazards are the tendencies or traits of an
individual that increase the chance of a loss.
Moral (Bad Habits)
Alcoholism, smoking, and bad credit are examples of
moral hazards.
Morale hazards are also individual tendencies, but
they arise from a state of mind, attitude, or
Morale (Carelessness)
indifference to loss. Not locking one's car or driving
recklessly are examples of morale hazards.
Physical hazards are physical conditions that increase
the chance of loss. For example, potholes on
Physical Hazards (Objects) freeways and streets, slippery floors, unsanitary
conditions, congested traffic, and unguarded
premises.
People are exposed to risks every day. How they deal
with them is called risk management, a process that
uses any combination of five risk management
techniques:
Risk Management Avoiding the risk
controlling (reducing) the risk
Sharing the risk
Retaining the risk
Transferring the risk
One way to manage a risk is simply to avoid it. For
Risk Avoidance example, those who do not own a car avoid the risk of
having a car being stolen or damaged.
If a risk cannot be avoided, it may be controllable
Risk Control
through risk prevention or risk reduction measures.
Risk prevention measures reduce the likelihood that a
Risk Prevention loss will occur. For example, shoveling snow off a
sidewalk makes it less likely a visitor will slip and fall.
2025) Questions & Answers | Latest Already
Graded A+ UPDATE 2025|2026
Save
Terms in this set (63)
Basic Risk and Loss Risk, Loss, Hazards, Perils, Exposure
Factors
The chance of loss and uncertainty. The term "risk"
also refers to the insured person, property, or activity.
Risk
A insured person, property, or activity is also known
as a "subject."
A loss is an unwelcome and unplanned reduction in
Loss
economic value.
The immediate result of an event caused by a covered
Direct Loss
peril.
Indirect Loss Loss that is a result or consequence of a direct loss.
Exposure The state of being subject to a possible loss
Destructive events that Insurance guards against.
Examples include:
Fire
Explosion
Peril
Windstorm (NS, W/H)
Flood
Theft
Collision
, A hazard is a condition that increases the likely
occurrence of a peril or the likely severity of a loss.
Hazard
There are 3 types of hazards (MMP): Moral, Morale,
and Physical.
Moral hazards are the tendencies or traits of an
individual that increase the chance of a loss.
Moral (Bad Habits)
Alcoholism, smoking, and bad credit are examples of
moral hazards.
Morale hazards are also individual tendencies, but
they arise from a state of mind, attitude, or
Morale (Carelessness)
indifference to loss. Not locking one's car or driving
recklessly are examples of morale hazards.
Physical hazards are physical conditions that increase
the chance of loss. For example, potholes on
Physical Hazards (Objects) freeways and streets, slippery floors, unsanitary
conditions, congested traffic, and unguarded
premises.
People are exposed to risks every day. How they deal
with them is called risk management, a process that
uses any combination of five risk management
techniques:
Risk Management Avoiding the risk
controlling (reducing) the risk
Sharing the risk
Retaining the risk
Transferring the risk
One way to manage a risk is simply to avoid it. For
Risk Avoidance example, those who do not own a car avoid the risk of
having a car being stolen or damaged.
If a risk cannot be avoided, it may be controllable
Risk Control
through risk prevention or risk reduction measures.
Risk prevention measures reduce the likelihood that a
Risk Prevention loss will occur. For example, shoveling snow off a
sidewalk makes it less likely a visitor will slip and fall.
