AINS 21 SEGMENT A QUESTIONS WITH 100%
SOLVED ANSWERS!!
Though premiums are an obvious cost of insurance, many insureds believe they
are too high because Answer - Benefits are intangible until a loss occurs.
Pravalt Construction Company pays less than its competitors for workers
compensation insurance because Pravalt has had substantially fewer employee
injuries than other firms in its class. This illustrates which one of the following
benefits of insurance? Answer - Promote risk control
Which one of the following statements is correct regarding the benefits that
insurance provides? Answer - Investment income helps keep insurance
premiums at a reasonable level.
As a single mother on a very tight budget, Ciara is tempted to skimp on her
insurance. However, her friend Mehmet tells her not to skimp on insurance,
because it will help manage her cash flows. Which one of the following
examples best illustrates Mehmet's point? Answer - When her car's windshield
breaks, Ciara has to pay only $100 of the $600 cost of replacing it.
The primary role of insurance is to Answer - Indemnify individuals and
organizations for covered losses.
Insurance is not the only risk management transfer technique. When
circumstances are appropriate, transfer can be accomplished through Answer -
Noninsurance transfer techniques.
, Retention is often used in combination with insurance as a way of treating loss
exposures. One of the major downsides of individuals using retention alone is
Answer - The potential for financial ruin.
Harry has a new sports car that is insured with an Insurance Services Office,
Inc. (ISO) Personal Auto Policy sold through his neighborhood agent. Because
this is the first new car he's ever owned, Harry is interested in making sure he is
fully covered and knowledgeable about his insurance policy. Which one of the
following is true for Harry? Answer - An insurance contract, like the ISO policy
Harry purchased, has certain additional characteristics other than those of
typical valid contracts.
Sally is a recent college graduate who lives in the suburbs and drives to work
daily in the city. She recognizes that owning a car creates both property
damage and liability exposures for her and at the same time she has the
burden of student loans. For someone in Sally's circumstances the most
practical risk management technique for dealing with her auto-related loss
exposures is Answer - Risk transfer.
From a risk management viewpoint, insurance is used to Answer - Transfer the
cost of losses.
Coverage for miscellaneous types of property such as movable property, goods
in domestic transit, and property used in transportation and communication,
typically is provided by Answer - Inland marine insurance.
A policy that combines property, crime, and liability coverages into one policy is
referred to as a(n) Answer - Commercial package policy (CPP).
SOLVED ANSWERS!!
Though premiums are an obvious cost of insurance, many insureds believe they
are too high because Answer - Benefits are intangible until a loss occurs.
Pravalt Construction Company pays less than its competitors for workers
compensation insurance because Pravalt has had substantially fewer employee
injuries than other firms in its class. This illustrates which one of the following
benefits of insurance? Answer - Promote risk control
Which one of the following statements is correct regarding the benefits that
insurance provides? Answer - Investment income helps keep insurance
premiums at a reasonable level.
As a single mother on a very tight budget, Ciara is tempted to skimp on her
insurance. However, her friend Mehmet tells her not to skimp on insurance,
because it will help manage her cash flows. Which one of the following
examples best illustrates Mehmet's point? Answer - When her car's windshield
breaks, Ciara has to pay only $100 of the $600 cost of replacing it.
The primary role of insurance is to Answer - Indemnify individuals and
organizations for covered losses.
Insurance is not the only risk management transfer technique. When
circumstances are appropriate, transfer can be accomplished through Answer -
Noninsurance transfer techniques.
, Retention is often used in combination with insurance as a way of treating loss
exposures. One of the major downsides of individuals using retention alone is
Answer - The potential for financial ruin.
Harry has a new sports car that is insured with an Insurance Services Office,
Inc. (ISO) Personal Auto Policy sold through his neighborhood agent. Because
this is the first new car he's ever owned, Harry is interested in making sure he is
fully covered and knowledgeable about his insurance policy. Which one of the
following is true for Harry? Answer - An insurance contract, like the ISO policy
Harry purchased, has certain additional characteristics other than those of
typical valid contracts.
Sally is a recent college graduate who lives in the suburbs and drives to work
daily in the city. She recognizes that owning a car creates both property
damage and liability exposures for her and at the same time she has the
burden of student loans. For someone in Sally's circumstances the most
practical risk management technique for dealing with her auto-related loss
exposures is Answer - Risk transfer.
From a risk management viewpoint, insurance is used to Answer - Transfer the
cost of losses.
Coverage for miscellaneous types of property such as movable property, goods
in domestic transit, and property used in transportation and communication,
typically is provided by Answer - Inland marine insurance.
A policy that combines property, crime, and liability coverages into one policy is
referred to as a(n) Answer - Commercial package policy (CPP).
