AINS 102 Understanding Personal Insurance Exam-Questions with
Correct Answers/ Verified/ Latest Update (2024/2025)
Risk Control Techniques - ✔✔Reduce the frequency and/or severity of a particular loss or
make losses more predictable
How many risk control techniques are there? - ✔✔6
List the Risk Control Techniques - ✔✔Avoidance
Loss Prevention
Loss Reduction
Separation
Duplication
Diversification
Avoidance - ✔✔ceasing activity/not engaging in activity to eliminate the possibility of loss
Loss Prevention - ✔✔reduces frequency of a particular loss / break the sequence of events
that lead to a loss
Loss Reduction - ✔✔reduce severity of a particular loss
Separation - ✔✔isolate loss exposures from one another to minimize the adverse effect of a
single loss
Duplication - ✔✔involves creating backups/spares/copies of property / information
Diversification - ✔✔spreads loss exposures over numerous areas/projects
Risk Financing - ✔✔Generate funds to pay for losses and risk control measures
, How many risk financing techniques are there? - ✔✔2
List the Risk Financing Techniques - ✔✔Retention
Transfer
Retention - ✔✔funds are generated or set aside to pay for losses that are retained by the
individual
Transfer - ✔✔shifting financial responsibility for losses to another party like insurance
What are the two types of risk management techniques? - ✔✔risk control techniques
risk financing techniques
What is often the only risk management technique option available to individuals/families? -
✔✔transfer
What are the 2 major financial consequences of a liability claim? - ✔✔monetary damages (if
settling out of court or the legal defense fails) and the cost of a legal defense/investigation
(even if successful)
What are the financial consequences of a liability loss exposure, theoretically? - ✔✔Limitless
What are the financial consequences of a liability loss exposure, practically? - ✔✔the total
wealth of the responsible party
In what forms are damages often awarded in a liability lawsuit? - ✔✔special damages
and/or general damages
special damages - ✔✔particular damages
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