INSR310 Exam 1 (Ch 1-9) || with 100% Verified Solutions.
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A condition that increases the chance of loss is called a(n) correct answers hazard
A publishing company solicits manuscripts for publication. The publishing company is concerned that an author might plagiarize material and that the person who was plagiarized might sue the publisher. To address ...
a condition that increases the chance of loss is c
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INSR310 Exam 1 (Ch 1-9) || with 100% Verified Solutions.
A condition that increases the chance of loss is called a(n) correct answers hazard
A publishing company solicits manuscripts for publication. The publishing company is
concerned that an author might plagiarize material and that the person who was plagiarized
might sue the publisher. To address this risk, the contract with the author includes a hold-
harmless agreement. Through this agreement, the author, rather than the publisher, is held liable
for plagiarism. In this situation, the publisher is using the hold-harmless agreement as what type
of risk treatment measure? correct answers risk transfer
A risk that affects the entire economy, or a large number of persons or groups within the
economy, is called a(n) correct answers nondiversifiable risk
All of the following are burdens of risk on society correct answers -risk requires funds to be set
aside in case a loss occurs, -Risk deprives society of certain good and services, -risk creates fear
and worry
Dean's Discount Store has been experiencing problems with shoplifting losses. Dean decided to
install a camera monitoring system and to use magnetic price tags on products. If a tag is not
demagnetized before the product bearing the tag leaves the store, an alarm bell sounds. These
measures are examples of correct answers loss prevention
An individual may commit an act that results in bodily injury or damage to someone's property.
A court of law may order the person responsible for the wrongful act to pay damages to the party
who was injured. This type of risk is called the correct answers liability risk
Kyle opened a sporting goods store. After a fire damaged the store, Kyle was forced to close the
business for four weeks while repairs were completed. The loss of profits that could have been
earned if the business had remained open is best described as a(n) correct answers indirect loss
(consequential)
The relative variation between expected losses and actual losses is called correct answers
objective risk
Which of the following statements is (are) true with respect to pure risks?
I. Pure risks may produce either a profit or a loss.
II. Premature death and damage to property caused by a fire are pure risks. correct answers II
Only
II. Premature death and damage to property caused by a fire are pure risks.
Which of the following statements is (are) true with respect to hazards?
I. Many physical hazards can be reduced through risk control measures.
II. Attitudinal hazard is more serious than moral hazard. correct answers I. Only
I. Many physical hazards can be reduced through risk control measures.
, The spreading of losses incurred by a few individuals over a larger group, so that average loss is
substituted for actual loss, is known as correct answers pooling of losses
All of the following are ideal characteristics for a risk to be privately insurable correct answers -
losses should not be catastrophic, -the chance of loss must be calculable, -there must be a large
number of similar exposure units (The loss IS NOT in the EDs control)
Which of the following statements is (are) true with respect to insurance and gambling?
I. Insurance is simply a wager that if a loss occurs, you'll be paid for the loss.
II. Both gambling and insurance are socially productive. correct answers Neither I nor II
Insurance is not a simple wager, and gambling/insurance are NOT socially productive.
Claire does not own health insurance. For the past two weeks, she has been experiencing sharp
abdominal pain. Given her condition, she would like to purchase health insurance. When higher-
than-average risks (like Claire) are insured at average premiums, losses are higher than
anticipated. What is this problem called? correct answers adverse selection
Insurers use a process of selecting and classifying insurance applicants to prevent individuals
who have a higher-than-average probability of loss from obtaining insurance at average rates.
This process is called correct answers underwriting
Franklin is concerned that if he damages someone else's property or injures someone, he will
have to pay a large damage award. What kind of insurance can Franklin purchase to protect
himself against such claims? correct answers liability insurance
Which of the following statements is (are) true with regard to insurance fraud?
I. Insurance fraud hurts insurers but does not affect policyholders.
II. Fraudulent claims are a cost of insurance to society. correct answers II Only
II. Fraudulent claims are a cost of insurance to society.
All of the following are benefits of insurance to society correct answers -indemnifies losses, -
enhances credit, -provides a pool of investment funds
(NOT reduces INSCO Operating Exp)
Government insurance programs include insurance designed to deal with complex economic
problems that are difficult to insure privately. These programs are compulsory, and the right to
benefits is based upon past contributions or coverage under the program. These programs, which
include workers compensation and social security, are called correct answers social insurance
programs
All of the following risks are privately insurable correct answers -fire damage to personal
property,
-financial insecurity caused by the premature death of the family breadwinner, -legal liability
arising out of negligent use of a car
(NOT adverse commodity price movement)
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