RMIN 4000 FINAL QUESTIONS &ANSWERS 100% VERIFIED!

Loss exposure - ANSWER-A situation or circumstance in which the loss is possible, regardless of whether a loss occurs A physical hazard - ANSWER-Dense fog that increases the chance of an automobile accident is an example of Subjective risk - ANSWER-Uncertainty based on a person's mental condition or state of mind Liability risk - ANSWER-James is concerned that if he injures someone or damages someone's property he could be held legally responsible and required to pay damages. This type of risk is called When the applicants with a higher-than-average chance of loss seek insurance at a standard rate - ANSWER-Adverse selection occurs when Passive retention - ANSWER-Timothy never stopped to consider the possible consequences of long-term, permanent, disability. So Timothy did not include disability income insurance in his personal risk management program. Timothy is dealing with the risk of disability through Adverse selection - ANSWER-ENO appliances offers a warranty requiring and annual fee. The warranty may be purchased at the time of sale or at any time within the first year the appliance was purchased. The warranty fee after the date of purchase is twice the time-of-purchase fee When asked why the fee was higher after the date of purchase, ENO's president said, "Buying a warranty is voluntary. We've noted that those why but the warranty after the purchase date have a greater need for service." Charging the same rate or a lower rate after the date of purchase would expose ENO to what problem that also impacts the insurance markets? Moral hazard - ANSWER-Sean borrowed money form a bank to purchase a fishing boat. He purchased property insurance on the boat. Sean had difficulty making loan payments because he did not catch many fish, and fish prices were low. Sean intentionally sunk the boat, collected from his insurer, and paid off the loan balance. This scenario illustrates problems of Sharing of losses by an entire group - ANSWER-Which of the following is implied by the pooling of losses? A pure risk - ANSWER-The premature death of an individual is an example of