chapter 14

Question 1

Risk

Answer 1

is the possibility of loss, damage, or injury

Question 2

Natural risk

Answer 2

is a situation caused by acts of nature

Question 3

Economic risk

Answer 3

a situation that occurs when business activities suffer due to changes in the US or world economy

Question 4

Market risk

Answer 4

is the potential that the target market for new goods or services is much less than originally projected

Question 5

Human risk

Answer 5

is a negative situation caused by the actions of people

Question 6

Risk management

Answer 6

is the process of evaluating risk and finding ways to minimize or manage loss

Question 7

Controllable risks

Answer 7

are situations that cannot be avoided, but can be minimized by purchasing insurance or creating a risk management plan

Question 8

Uncontrollable risks

Answer 8

are situations that cannot be predicted or covered by purchasing insurance

Question 9

Pure risk

Answer 9

is a risk with a possibility of loss, but no possibility of gain

Question 10

Personal risks

Answer 10

directly affect an individual

Question 11

Property risks

Answer 11

affect personal or business property

Question 12

Liability risks

Answer 12

result from the possibility of losing money, property, or other assets because of legal proceedings

Question 13

Speculative risk

Answer 13

is a risk that can result in either financial gain or financial loss

Question 14

Avoidance

Answer 14

is taking steps to eliminate risk

Question 15

Reducing

Answer 15

is a strategy of minimizing risks that cannot be avoided

Question 16

Transferring

Answer 16

is sharing the risk with others

Question 17

Assuming risk

Answer 17

means accepting full responsibility for a loss

Question 18

Uninsurable risk

Answer 18

is one that an insurance company will not cover

Question 19

DAY 2

Question 20

insurance policy

Answer 20

defines the type of losses that are covered, amount of coverage in dollars, and other conditions to which the two parties agree

Question 21

Premium

Answer 21

Amount insured pays for insurance coverage

Question 22

Claim

Answer 22

Process of documenting a loss against an insurance policy

Question 23

Deductible

Answer 23

Amount the insured is responsible for paying when a claim is made

Question 24

Independent agent

Answer 24

is an insurance agent who works for multiple insurance companies; broker

Question 25

Contract agent

Answer 25

only one insurance companies an insurance agent who works for

Question 26

General liability insurance

Answer 26

protects against financial losses that result from legal issues

Question 27

Cyber insurance

Answer 27

covers loss incurred from cyberattacks, such as data breaches and computer viruses

Question 28

Product liability insurance

Answer 28

protects against financial losses due to a product defect that may cause injury to the user of the product

Question 29

Professional liability insurance

Answer 29

protects service-based businesses from financial losses caused by errors and negligence in how a service is provided

Question 30

Commercial insurance

Answer 30

is insurance that protects commercial property from risks

Question 31

Commercial property insurance

Answer 31

covers buildings and other assets of the business

Question 32

Commercial auto insurance

Answer 32

protects vehicles owned by a business from accidents and other losses

Question 33

Inland marine insurance

Answer 33

protects property being transported for business

Question 34

Equipment breakdown insurance

Answer 34

covers losses due to the accidental breakdown of machinery and equipment

Question 35

Ordinance or law insurance covers

Answer 35

losses caused when local building ordinances or laws are enforced

Question 36

Liability insurance

Answer 36

covers financial losses caused by the actions or negligence of a person or business

Question 37

Business interruption insurance

Answer 37

covers lost income and expenses caused by a property damage loss

Question 38

Fidelity bonds

Answer 38

cover financial, and property losses caused by employee actions

Question 39

Directors and officers' insurance

Answer 39

covers financial losses caused by company’s executive officers

Question 40

Data breach insurance

Answer 40

covers legal fees and financial losses sustained when a company’s data files are accessed without permission

Question 41

Property insurance

Answer 41

covers losses and damage to the assets of a business caused by a variety of events, such as floods, fire, smoke, and vandalism

Question 42

Vehicle insurance

Answer 42

covers commercial vehicles owned by the business

Question 43

Workers’ compensation insurance

Answer 43

covers medical expenses and lost wages for employees injured at work

Question 44

Unemployment insurance

Answer 44

provides specific benefits to workers who lose their jobs through no fault of their own

Question 45

Disability insurance

Answer 45

provides some income to employees who become sick or injured due to a nonwork-related event or condition