Utah Insurance Exam Prep 2023/24 (Guaranteed Pass!)

Risk correct answers Chance of loss Insurance correct answers A contract in which one party agrees to indemnify the insured party against loss, damage or liability arising from an unknown event. Pure risk correct answers Chance of loss only Speculative correct answers Chance of loss or gain 2 types of risk correct answers Pure & speculative Only risk insurance covers? correct answers Pure Exposure correct answers Unit of measurement. Measures the amount of risk. Hazard correct answers Condition that INCREASES the chance of loss. Types of hazards correct answers Physical (can't be controlled) & moral (due to lack of character) & morale (due to carelessness). Which hazards does insurance cover? correct answers Physical & Morale Peril correct answers Cause of loss (ex: homeowners- fire, wind, ect.) Loss correct answers Financial consequence. Reduction or decrease value. Methods of handling risk correct answers 1. Sharing 2. Transfer 3. Avoidance 4. Retention 5. Reduction STARR Risk avoidance correct answers Eliminate risk Risk retention correct answers -Keep (retain) the risk. -Methods: deciding to not buy insurance. & Being self- insured. & having a deductible. -reasons: save money & some risk cannot be insured. Risk sharing correct answers Similar parties share the losses that occur within the group. (Ex. Neighbors forming an informal risk sharing group. Reciprocal insurance exchanges (farmers insurance) Risk reduction correct answers Taking action to lessen the risk. (Ex. Slow down when driving)