Deck 7: Principles of Risk and Insurance

Question 1

Elements of the Risk Management Process are:
I)Analyze and evaluate potential economic loss exposures.
II)Develop and present recommendations.
III)Implement risk management plan.
IV)Monitor the risk management plan.

A)I,II,IV.
B)II,III,IV.
C)I,II,III.
D)I,II,III,IV.

Answer 1

D

Question 2

Collision,fire,hurricane,and theft are examples of:

A)Hazard.
B)Law of large numbers.
C)Peril.
D)Risk.

Answer 2

C

Question 3

An insurance company's appointment of an agent to act on its behalf is an example of:

A)Apparent Authority.
B)Express Authority.
C)Implied Authority.
D)Legal Authority.

Answer 3

B

Question 4

Intramural sports are an example of which of the following:

A)Economic risk.
B)Investment risk.
C)Pure risk.
D)Speculative risk.

Question 5

Which of the following is not an example of a Static risk?

A)Earthquake.
B)Flood.
C)Recession.
D)Sinkhole.

Question 6

All of the following are Methods of Settling a Loss except:

A)Actual Cash Value.
B)Fair Market Value.
C)Guaranteed Replacement Cost.
D)Replacement Cost.

Question 7

A formal program of risk retention for an individual that takes on the insurance company's role in order to cover the individual's risk is:

A)Adverse selection.
B)Formal fund.
C)Risk transfer.
D)Self-insurance.

Question 8

The selection of an insurance company includes all of the following except:

A)Cost-benefit analysis.
B)Economic cycle.
C)Industry ratings.
D)Purpose of coverage.