Quiz #1 Flashcards
Which type of risk can be insured?
Pure risk
Illegal risk
Speculative risk
Moral risk
Pure risk
Which of the following is an example of a peril?
Loose carpet on stairs
A malfunctioning machine at a factory
An explosion resulting in fire
A poorly maintained heating system
An explosion resulting in fire
All costs associated with managing pure risk are know as which of the following?
Cost of loss
Cost of goods sold
Cost of risk
Cost of doing business
Cost of risk
How can insurance be an aid to security?
By substituting a certain premium payment in place of an uncertain loss payment
By being virtually impossible to obtain credit without having insurance on the item concerned
By reducing or preventing losses
By being a source of employment for many Canadians
By substituting a certain premium payment in place of an uncertain loss payment
Sales representatives’ samples are an example of which type of general insurance?
Personal effects floater
Commercial property floater
Crime
Real property
Commercial property floater
What is a peril?
An event that will give rise to a loss
A factor that may increase the likelihood of a loss
An event that will prevent a loss
An example of risk
An event that will give rise to a loss
Which of the following is NOT a loss prevention technique?
Deciding not to engage in a new business venture
Safety guards on machines
Regular inspection and testing of machinery and equipment
Driver safety training programs
Deciding not to engage in a new business venture
What type of insurance would cover losses arising from libel and slander?
Liability insurance
Crime insurance
Accident insurance
Surety bonds
Liability insurance
How do insurers spread risk?
By premium, rate, and indemnity
By volume, premium, and diversity of location
By volume, diversity of risks, and diversity of location
By diversity of risks, premium, and indemnity
By volume, diversity of risks, and diversity of location
Which of the following is both a pre-loss and a post-loss objective of risk management?
Operational continuity
Sustained growth
Survival
Social reponsibility
Social reponsibility
Which of the following is NOT one of the three general categories that perils are grouped into?
Natural
Human
Economic
Insurance
Insurance
Which of the following is a commonly used method of exposure identification?
Personal opinion
Law of large numbers
Survey
Cost-benefit analysis
Survey
What does it mean to indemnify?
To review an application for insurance and decide whether or not to cover the risk
To provide compensation for loss or expense incurred
To determine what price the insurer should charge for providing coverage
To calculate the premium an insured should pay
To provide compensation for loss or expense incurred
What is unearned premium?
The penalty charged for cancelling an insurance policy early
The cost for insuring a category of risk
The portion of premium earned or charged for the period of time a policy remained effective
The part of the premium that has not been used or earned; premium representing the unexpired portion of a policy
The part of the premium that has not been used or earned; premium representing the unexpired portion of a policy
What type of insurance covers goods in transit on land?
Marine
Inland transportation
Fire
Aviation
Inland transportation
