Question 1

Which insurance coverage is required by law in most states?

Accepted Answer

A)  Workers' compensation 
B)  Product liability insurance 
C)  Key executive coverage 
D)  Employee bonding 
A)  Workers' compensation 
B)  Product liability insurance 
C)  Key executive coverage 
D)  Employee bonding

Question 2

Match the term with its definition. Some terms may not be used.
-Coverage that provides benefits to a firm upon the death of key personnel

Accepted Answer

A) Business interruption insurance 
B) Business owner's policy 
C) Commercial general liability insurance 
D) Disability insurance 
E) Indemnification clause
F)Key-person life insurance
G)Package policy
H)Personnel risks
I)Proximate cause
J)Reasonable standard
K)Workers' compensation insurance 
A) Business interruption insurance 
B) Business owner's policy 
C) Commercial general liability insurance 
D) Disability insurance 
E) Indemnification clause
F)Key-person life insurance
G)Package policy
H)Personnel risks
I)Proximate cause
J)Reasonable standard
K)Workers' compensation insurance

Question 3

Discuss advantages and disadvantages to a company obtaining a BOP policy.

Accepted Answer

A business owner's policy (BOP) combines

Question 4

Business interruption insurance covers

Accepted Answer

A)  debts to suppliers. 
B)  shoplifting. 
C)  lost income. 
D)  defective products. 
A)  debts to suppliers. 
B)  shoplifting. 
C)  lost income. 
D)  defective products.

Question 5

Match the term with its definition. Some terms may not be used.
-Compensatory damages that relate to economic loss, such as medical expenses and loss of income

Accepted Answer

A) All-risk approach 
B) Business risk 
C) Compensatory damages 
D) Disability insurance 
E) Economic damages
F)Health maintenance organization
G)Market risk
H)Named-peril approach
I)Peril
J)Preferred provider organization
K)Pure risk 
A) All-risk approach 
B) Business risk 
C) Compensatory damages 
D) Disability insurance 
E) Economic damages
F)Health maintenance organization
G)Market risk
H)Named-peril approach
I)Peril
J)Preferred provider organization
K)Pure risk

Question 6

Concern about the employees is considered in which principle of a sound insurance program?

Accepted Answer

A)  What kinds of risk can be covered by insurance? 
B)  What types of coverage should be purchased? 
C)  How much coverage is adequate? 
D)  All of the above will concern employees. 
A)  What kinds of risk can be covered by insurance? 
B)  What types of coverage should be purchased? 
C)  How much coverage is adequate? 
D)  All of the above will concern employees.

Question 7

A coinsurance provision requires that a property be insured for at least ____ percent of its value.

Accepted Answer

A)  60 
B)  70 
C)  80 
D)  90 
A)  60 
B)  70 
C)  80 
D)  90

Question 8

For a person to be found guilty of a negligent act, the negligent act must be the ____ cause of the loss in a tort liability claim.

Accepted Answer

A)  assumed 
B)  compensatory 
C)  proximate 
D)  statutory 
A)  assumed 
B)  compensatory 
C)  proximate 
D)  statutory

Question 9

A property insurance policy is used by a business owner to insure buildings and personal
property owned but not leased by the business.

Accepted Answer

A) True 
 B)False

Question 10

Match the term with its definition. Some terms may not be used.
-Stating in a property insurance policy that all direct damages are covered except those caused by perils specifically excluded

Accepted Answer

A) All-risk approach 
B) Business risk 
C) Compensatory damages 
D) Disability insurance 
E) Economic damages
F)Health maintenance organization
G)Market risk
H)Named-peril approach
I)Peril
J)Preferred provider organization
K)Pure risk 
A) All-risk approach 
B) Business risk 
C) Compensatory damages 
D) Disability insurance 
E) Economic damages
F)Health maintenance organization
G)Market risk
H)Named-peril approach
I)Peril
J)Preferred provider organization
K)Pure risk

Question 11

Match the term with its definition. Some terms may not be used.
-A loss in which physical damage to property reduces its value to the property owner

Accepted Answer

A) Actual cash value 
B) Aggregate stop loss limit 
C) Direct loss 
D) Disability buyout insurance 
E) Disability insurance
F)Indirect loss
G)Loss avoidance
H)Loss prevention
I)Loss reduction
J)Replacement value of property
K)Specific stop loss limit 
A) Actual cash value 
B) Aggregate stop loss limit 
C) Direct loss 
D) Disability buyout insurance 
E) Disability insurance
F)Indirect loss
G)Loss avoidance
H)Loss prevention
I)Loss reduction
J)Replacement value of property
K)Specific stop loss limit

Question 12

Match the term with its definition. Some terms may not be used.
-Coverage that provides benefits to employees injured at work

Accepted Answer

A) Business interruption insurance 
B) Business owner's policy 
C) Commercial general liability insurance 
D) Disability insurance 
E) Indemnification clause
F)Key-person life insurance
G)Package policy
H)Personnel risks
I)Proximate cause
J)Reasonable standard
K)Workers' compensation insurance 
A) Business interruption insurance 
B) Business owner's policy 
C) Commercial general liability insurance 
D) Disability insurance 
E) Indemnification clause
F)Key-person life insurance
G)Package policy
H)Personnel risks
I)Proximate cause
J)Reasonable standard
K)Workers' compensation insurance

Question 13

Match the term with its definition. Some terms may not be used.
-The uncertainty associated with an investment decision

Accepted Answer

A) All-risk approach 
B) Business risk 
C) Compensatory damages 
D) Disability insurance 
E) Economic damages
F)Health maintenance organization
G)Market risk
H)Named-peril approach
I)Peril
J)Preferred provider organization
K)Pure risk 
A) All-risk approach 
B) Business risk 
C) Compensatory damages 
D) Disability insurance 
E) Economic damages
F)Health maintenance organization
G)Market risk
H)Named-peril approach
I)Peril
J)Preferred provider organization
K)Pure risk

Question 14

Damage to a building by fire is an example of

Accepted Answer

A)  a benign neglect loss. 
B)  a direct loss. 
C)  a tort-based liability claim. 
D)  a depreciated cash value loss. 
A)  a benign neglect loss. 
B)  a direct loss. 
C)  a tort-based liability claim. 
D)  a depreciated cash value loss.

Question 15

Self-insurance requires designating part of a firm's insurance proceeds to provide life insurance on key employees.

Accepted Answer

A) True 
 B)False

Question 16

One risk that small businesses normally cover is loss due to the disability of a partner or other key employee of the company.

Accepted Answer

A) True 
 B)False

Question 17

Match the term with its definition. Some terms may not be used.
-A defect resulting from a dangerous design, even though the product was made according to specifications

Accepted Answer

A) Automobile insurance 
B) Coinsurance clause 
C) Crime insurance 
D) Design defect 
E) Manufacturing defect
F)Marketing defect
G)Noneconomic damages
H)Partially self-funded program
I)Proximate cause
J)Punitive damages
K)Workers' compensation legislation 
A) Automobile insurance 
B) Coinsurance clause 
C) Crime insurance 
D) Design defect 
E) Manufacturing defect
F)Marketing defect
G)Noneconomic damages
H)Partially self-funded program
I)Proximate cause
J)Punitive damages
K)Workers' compensation legislation

Question 18

Pain, suffering, mental anguish and loss of physical abilities are included in which type of damages in a tort case?

Accepted Answer

A)  non economic 
B)  compensatory 
C)  economic 
D)  punitive 
A)  non economic 
B)  compensatory 
C)  economic 
D)  punitive

Question 19

Philip leases retail space in a building owned by Roger. The lease agreement contains a(n) _____________ excusing Roger from responsibility for any financial consequences of Philip's actions.

Accepted Answer

A)  premises liability clause 
B)  indemnification clause 
C)  operations liability clause 
D)  lessor's release of action clause 
A)  premises liability clause 
B)  indemnification clause 
C)  operations liability clause 
D)  lessor's release of action clause

Question 20

A consulting firm that typically does not have clients visit its business location would have minimal premises liability exposure.

Accepted Answer

A) True 
 B)False

Exam 23: Managing Risk in the Small Business

Which insurance coverage is required by law in most states?

Match the term with its definition. Some terms may not be used. -Coverage that provides benefits to a firm upon the death of key personnel

Discuss advantages and disadvantages to a company obtaining a BOP policy.

Business interruption insurance covers

Match the term with its definition. Some terms may not be used. -Compensatory damages that relate to economic loss, such as medical expenses and loss of income

Concern about the employees is considered in which principle of a sound insurance program?

A coinsurance provision requires that a property be insured for at least ____ percent of its value.

For a person to be found guilty of a negligent act, the negligent act must be the ____ cause of the loss in a tort liability claim.

A property insurance policy is used by a business owner to insure buildings and personal property owned but not leased by the business.

Match the term with its definition. Some terms may not be used. -Stating in a property insurance policy that all direct damages are covered except those caused by perils specifically excluded

Match the term with its definition. Some terms may not be used. -A loss in which physical damage to property reduces its value to the property owner

Match the term with its definition. Some terms may not be used. -Coverage that provides benefits to employees injured at work

Match the term with its definition. Some terms may not be used. -The uncertainty associated with an investment decision

Damage to a building by fire is an example of

Self-insurance requires designating part of a firm's insurance proceeds to provide life insurance on key employees.

One risk that small businesses normally cover is loss due to the disability of a partner or other key employee of the company.

Match the term with its definition. Some terms may not be used. -A defect resulting from a dangerous design, even though the product was made according to specifications

Pain, suffering, mental anguish and loss of physical abilities are included in which type of damages in a tort case?

Philip leases retail space in a building owned by Roger. The lease agreement contains a(n) _____________ excusing Roger from responsibility for any financial consequences of Philip's actions.

A consulting firm that typically does not have clients visit its business location would have minimal premises liability exposure.

The Entrepreneurial Life

Integrity and Ethics: Foundations for Success in Small Business

Starting a Small Business

Franchises and Buyouts

The Family Business

The Business Plan: Visualizing the Dream

The Marketing Plan

The Organizational Plan: Teams, Legal Structures, Alliances, and Directors

The Location Plan

Understanding a Firms Financial Statements

Forecasting Financial Requirements

A Firms Sources of Financing

Planning for the Harvest

Building Customer Relationships

Product Development and Supply Chain Management

Pricing and Credit Decisions

Promotional Planning

Global Opportunities for Small Business

Professional Management and the Small Business

Managing Human Resources

Managing Operations

Managing the Firms Assets

A: Managing Risk in the Small Business

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