Exam (elaborations)
RMIN 4000 Exam 1 Brown|106 Questions with Solutions
- Course
- Institution
RMIN 4000 Exam 1 Brown|106 Questions with Solutions
[Show more]
Content preview
RMIN 4000 Exam 1 Brown|106Questions with Solutions
Textbook definition of RISK - -Uncertainty concerning the occurrence of a
loss
- Better definition of RISK - -A calculated possibility of a negative outcome
- Calculated Possibility - -0 = Impossible event (NO RISK)
0.5 = Highest Risk (Most Uncertainty)
1 = 100% Certain Event (NO RISK
- Negative Outcome - -Loss
- Losses must be __________? - -Quantifiable
- Pure Risk States - -Loss
or
No Loss
- Examples of Pure Risks - -Fire, Cancer, Dog bites a visitor
- Speculative Risk States - -Loss
No Loss/No Gain
Gain
- Examples of speculative risks - -Investment, Gambling, Drinking
- Frequency answers what question? - -How often does a loss occur
The number of losses that occur in a specified time period
- Probability of a loss - -Frequency
- Severity answers what question? - -How much does it cost when a loss
does occur?
The dollar amount for a loss of a specific peril
, - Peril - -Cause of a loss
- Hazard - -Condition that creates or increases the frequency and/or
severity of a loss
DOES NOT CAUSE A LOSS
- Examples of Peril - -Fire, Tornado, Collision, Burglary
- Types of Hazard - -Physical
Moral
Morale (Attitudinal)
Legal
- Physical Hazard - -A physical condition that increases the frequency and/or
severity of a loss
- Book Definition of Moral Hazard - -Dishonesty or character defects in an
individual that increase the frequency and/or severity of a loss
- Better Definition of Moral Hazard - -The presence of insurance changes the
behavior of the insured
- Examples of Moral Hazard - -Using a hammer to create "hail" damage to a
roof
Exaggerating the value of insured property
- Morale (Attitudinal) Hazard - -Carelessness or indifference to a loss, which
increases increases the frequency and/or severity of a loss
- Examples of Morale Hazard - -Leaving car keys in an unlocked car
Neglecting a tree limb growing over your roof
- Legal Hazard - -Characteristics of a legal system or regulatory
environment that increase the frequency and/or severity of a loss
- Examples of a Legal Hazard - -Juries in some areas are more sympathetic
than in other areas
Georgia now requiring Diminution in Value to be paid on property losses
- Diversifiable Risk - -Affects only individuals or small groups, not the entire
economy
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Nursephil2023. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $10.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
62890 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now