Michigan Property & Casualty Insurance Exam 2023 with 100% correct answers

Risk The possibility that a loss will occur Speculative Risk Chance of loss or gain Pure Risk only the possibility of loss Peril cause of loss Exposure The potential for accidents and other losses Direct Loss Loss that is a direct result of a peril, such as fire. Indirect Loss Loss that is a result or consequence of a direct loss Moral Hazard Arise from a person's character (dishonesty) Morale Hazard A condition of carelessness or indifference that increases the frequency or severity of loss. Physical Hazard a physical condition that increases the frequency or severity of loss Sharing risk Two or more individuals share risk transfer risk The purpose of insurance Avoidance eliminating certain risk by not engaging in certain activity Retention Self-insurance, person will pay for loss Reduction Lessening the possibility or severity of a loss.