Question 1

Typically, insurance premiums to cover employee lawsuits start at

Accepted Answer

A)  $2,500. 
B)  $7,500. 
C)  $15,000. 
D)  The amount differs from the above values. 
A)  $2,500. 
B)  $7,500. 
C)  $15,000. 
D)  The amount differs from the above values.

Question 2

Flood insurance can be purchased for only real property.

Accepted Answer

A) True 
 B)False

Question 3

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 4

A small business customer slips on a wet floor (due to a slow water leak), falls and breaks an arm. Damages that could potentially be awarded to the customer might include:

Accepted Answer

A)  economic since the customer has a loss of physical abilities. 
B)  noneconomic since the customer has medical bills. 
C)  punitive due to the leak. 
D)  compensatory to cover the cost of repairing the leak. 
A)  economic since the customer has a loss of physical abilities. 
B)  noneconomic since the customer has medical bills. 
C)  punitive due to the leak. 
D)  compensatory to cover the cost of repairing the leak.

Question 5

Market risk is uncertainty associated with a situation where only loss or no loss can occur.

Accepted Answer

A) True 
 B)False

Question 6

Match between columns
                        Premises: Coverage that provides benefits upon the disability of a firm's partner or other key employee
Minimizing potential losses by preventing, avoiding, and/or reducing risk
Wrongful acts or omissions for which an injured party can take legal action against the wrongdoer for monetary damages
Making funds available to cover losses that cannot be eliminated by risk control
Coverage that designates part of a firm's earnings as a cushion against possible future losses
Buying insurance or making contractual arrangements that transfer risk to others
Financing loss intentionally through a firm's cash flows
Any property other than land and anything physically attached to the land, such as buildings
Land and anything physically attached to the land, such as buildings
Ways of coping with risk that are designed to preserve the assets and earning power of a firm

Accepted Answer

The Answer of Risk control and Risk transfer and Torts is...

Question 7

Doug's BOP on his fishing guide business excludes property losses due to the wakes of other fishing boats. This example illustrated the ____ approach to property insurance.

Accepted Answer

A)  foreseen risk 
B)  insurance-to-value 
C)  all-risk 
D)  named-peril 
A)  foreseen risk 
B)  insurance-to-value 
C)  all-risk 
D)  named-peril

Question 8

Property insurance that covers all direct damage to property except damage caused by perils specifically excluded is called CGL.

Accepted Answer

A) True 
 B)False

Question 9

Specific and aggregate stop loss limits would be the best insurance plans of small businesses which have at least 80 employees.

Accepted Answer

A) True 
 B)False

Question 10

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 11

Perry's business is not in the safest neighborhood.  He is concerned about robbery and vandalism, two types of:

Accepted Answer

A)  business risk. 
B)  market risk. 
C)  pure risk. 
D)  uninsurable risk. 
A)  business risk. 
B)  market risk. 
C)  pure risk. 
D)  uninsurable risk.

Question 12

A defect resulting from failure to convey to the user that hazards are associated with a product or to provide adequate instructions on safe product use is known as a(n)

Accepted Answer

A)  marketing defect. 
B)  manufacturing defect. 
C)  design defect. 
D)  engineering defect. 
A)  marketing defect. 
B)  manufacturing defect. 
C)  design defect. 
D)  engineering defect.

Question 13

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

Accepted Answer

A)  Identify business risks that can be insured. 
B)  Secure insurance coverage for all major potential losses. 
C)  Consider the feasibility and affordability of insuring smaller potential losses. 
D)  Review and evaluate. 
A)  Identify business risks that can be insured. 
B)  Secure insurance coverage for all major potential losses. 
C)  Consider the feasibility and affordability of insuring smaller potential losses. 
D)  Review and evaluate.

Question 14

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 15

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

Accepted Answer

Pure risk is the uncertainty associated

Question 16

As a general rule, only ______   is insurable.

Accepted Answer

A)  business risk 
B)  market risk 
C)  pure risk 
D)  risk 
A)  business risk 
B)  market risk 
C)  pure risk 
D)  risk

Question 17

Beth has started an elder care service.  Employees work with persons who are not ready to leave their home but have some disability that prevents them from being fully mobile.  What should Beth consider in managing the associated risk?

Accepted Answer

The company should identify ways for ris

Question 18

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 19

Wrongful acts or omissions for which an injured party can take legal action against the wrongdoer to seek monetary damages are called statutory liability .

Accepted Answer

A) True 
 B)False

Question 20

Since the small business owner needs to rely heavily on an insurance agent for advice, risk management and insurance management are synonymous.

Accepted Answer

A) True 
 B)False

Exam 23: Managing Risk

Typically, insurance premiums to cover employee lawsuits start at

Flood insurance can be purchased for only real property.

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

A small business customer slips on a wet floor (due to a slow water leak), falls and breaks an arm. Damages that could potentially be awarded to the customer might include:

Market risk is uncertainty associated with a situation where only loss or no loss can occur.

Doug's BOP on his fishing guide business excludes property losses due to the wakes of other fishing boats. This example illustrated the ____ approach to property insurance.

Property insurance that covers all direct damage to property except damage caused by perils specifically excluded is called CGL.

Specific and aggregate stop loss limits would be the best insurance plans of small businesses which have at least 80 employees.

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

Perry's business is not in the safest neighborhood. He is concerned about robbery and vandalism, two types of:

A defect resulting from failure to convey to the user that hazards are associated with a product or to provide adequate instructions on safe product use is known as a(n)

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

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.

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

As a general rule, only ______ is insurable.

Beth has started an elder care service. Employees work with persons who are not ready to leave their home but have some disability that prevents them from being fully mobile. What should Beth consider in managing the associated risk?

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

Wrongful acts or omissions for which an injured party can take legal action against the wrongdoer to seek monetary damages are called statutory liability .

Since the small business owner needs to rely heavily on an insurance agent for advice, risk management and insurance management are synonymous.

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