Faulty wiring causes a fire that destroys a building. The faulty wiring is considered to be a(n): A)proximate cause.
B)indirect cause.
C)peril.
D)hazard.
Peril
Which one of the following is an example of a peril? A)Earthquake.
B)Indifference.
C)Gasoline stored on the premises.
D)Illness.
Earthquake
A chance, possibility, or uncertainty of loss is known as a: A)peril.
B)risk.
C)proximate cause.
D)hazard.
Risk
How is uncertainty regarding loss best described? A)Risk.
B)Hazard.
C)Insurance.
D)Peril.
Risk
Which of the following is NOT an element of an insurable risk? A)The loss must have a determinable value.
B)The loss must be accidental from the insured's perspective.
C)The loss must be catastrophic.
D)The loss must be due to chance.
The loss must be catastrophic
Dishonesty on the part of an insured is an example of: A)a moral hazard.
B)a peril.
C)a morale hazard.
D)a physical hazard.
Moral Hazard
Robert and Carolyn live in a busy city and decide that not owning a car is the solution to not experience having a car stolen. Which of the following methods describes this philosophy? A)Loss control.
B)Transfer.
C)Retention.
D)Avoidance.
Avoidance
Transferring is a method of handling risk. Which of the following best describes the concept of transfer?A)Increasing a deductible to share the loss with the insurance company.
B)Purchasing insurance.
C)Buying a car with a friend to share the risk.
D)Sign
Purchasing Insurance
Self-insurance is an example of what kind of risk treatment?A)Retention.
B)Reduction.
C)Avoidance.
D)Transference.
Retention
If John's father transfers ownership of a house to John, which one of the following statements regarding insurance on the house is CORRECT? A)John's father must retain his policy on the house.
B)John's father must assign his policy to John as well.
C)John
John can buy insurance because he has an insurable interest.
The purpose of insurance is to: A)transfer risk.
B)reduce adverse selection.
C)eliminate hazards.
D)eliminate risk.
transfer risk
Which one of the following risks is insurable? A)Pure.
B)Partial.
C)Speculative.
D)Whole
Pure
Which of the following is NOT a source of information important to an underwriter? A)Motor vehicle reports.
B)Employer reference.
C)Agent or producer comments.
D)Consumer reports.
Employee Reference
With regard to insurance, risk can be defined as:
A)certainty regarding financial gain.
B)certainty regarding loss.
C)uncertainty regarding loss.
D)uncertainty regarding financial gain.
uncertainty regarding loss
What is the actual cause of a loss?
A)Risk.
B)Peril.
C)Hazard.
D)Proximate cause.
Peril
Which one of the following statements pertaining to risk is NOT correct?
A)Pure risk involves only the chance of loss; there is never a possibility of gain or profit.
B)Only pure risks are insurable.
C)Uncertainty regarding financial loss is the definitio
A stock market venture is an example of a pure risk
Which one of the following hazards can be described as a careless attitude or general indifference on the part of the insured toward the occurrence of loss?
A)Physical.
B)Moral.
C)Morale.
D)Legal
Morale
Which of the following is an example of reduction as a method of handling risk?
A)Increasing a deductible.
B)Reducing coverage.
C)Installing a burglar alarm.
D)Buying insurance to reduce the risk.
Installing a burglar alarm
Treating risk by purchasing insurance is an example of what type of risk management?
A)Transfer.
B)Reduction.
C)Retention.
D)Avoidance.
Retention
Fire would be an example of a:
A)peril.
B)hazard.
C)loss.
D)risk.
Hazard
Which one of the following best defines a hazard?
A)Unexpected loss.
B)Cause of a loss.
C)Condition that increases the chance of a loss.
D)Uncertainty of a loss.
Condition that increases the chance of a loss
Which of the following is NOT an example of an insurable interest?
A)Person's interest in property she hopes that her uncle will leave to her in his will.
B)Person's interest in the improvements he has added to his leased apartment.
C)Person's interest in
Person's interest in property she hopes that her uncle will leave her in his will.
A condition or situation that presents a possibility of loss is a (an):
A)law of large numbers.
B)exposure.
C)named certainty.
D)proximate cause.
Exposure
Which one of the following is considered a hazard?
A)Lightning.
B)Explosion.
C)Trash.
D)Fire.
Trash
The law of large numbers states that the:
A)smaller the number of risks combined into one group, the larger the loss will be to any one individual in that group.
B)larger the number of risks combined into one group, the smaller the loss will be to any one
larger the number of risks combined into one group, the less uncertainty there will be as to the amount of loss that will be incurred.
The risk that involves the chance of both loss and gain is:
A)impure risk.
B)pure risk.
C)whole risk.
D)speculative risk.
speculative risk
Driving too fast and not wearing a seat belt are examples of:
A)morale hazard.
B)moral hazard.
C)risk.
D)physical hazard.
morale hazzard