Exam 23: Managing Risk in the Small Business

Match the term with its definition.Some terms may not be used 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 -Insurance that provides a healthy partner the cash to buy out a partner who becomes ill.

Match the term with its definition.Some terms may not be used a.Business interruption insurance b.Business owner's policy c.Combined public liability insurance d.Disability insurance e.Funds transfer fraud f.Key-person life insurance g.Package policy h.Personnel risks i.Proximate cause j.Reasonable standard k.Employers liability insurance -Coverage that reimburses a business for the loss of anticipated income following the interruption of business operations.

Match the term with its definition.Some terms may not be used 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 -Choosing not to engage in hazardous activities.

Morton is discussing with his insurance agent the possibility that he might lose his building and equipment in the event of a fire or windstorm.Should that happen, Morton's company would not be able to earn revenues.These two people are discussing:

Assume that the physical property of a business is valued at R5 000 000.The company's commercial property policy contains a coinsurance clause with a stated percentage of 80 per cent.The company insures the property for R3 000 000 (75 per cent of the specified minimum).The company incurs a fire loss of R2 000 000.How much of the loss will the insurance company pay for?

Discuss the differences between pure risk, business risk and market risk.

Compensatory damages include ________ damages.

Pure risk is:

A policy for small businesses that do not qualify for a commercial insurance policy that combines property insurance and commercial general liability insurance is called a:

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

The company's ability to absorb losses will determine what smaller potential losses will be insured.