RMIN 4000 Brown UGA Test 1 with Complete Solutions!

Frequency - ANSWER-How often does a loss occur? The number of losses (such as fire, theft, collision) that occur within a specified time period probability of a loss severity - ANSWER-How much does it cost when a loss does occur? The dollar amount of loss for a specific peril (fire, theft, collision) Peril - ANSWER-cause of a loss Ex. fire, tornado, collision, burglary hazard - ANSWER-condition that creates or increases the frequency and/or severity of a loss physical hazard - ANSWER-a physical condition that increases the frequency and/or severity of a loss moral hazard - ANSWER-dishonesty or character defects in an individual that increase the frequency and/or severity of a loss presence of insurance changes the behavior of the insured Ex. using a hammer to create "hail" damage to a roof morale hazard - ANSWER-carelessness or indifference to a loss, which increases the frequency and/or severity of a loss ex. leaving keys in an unlocked car personal risk - ANSWER-directly affects an individual or family; involve the possibility of loss of income, extra expenses, depletion of financial assets ex. death, unemployment, disability/injury/ poor health, inadequate retirement income direct loss - ANSWER-cost to repair or replace property damaged by a peril indirect loss - ANSWER-financial loss resulting as a consequence of a direct loss ex. fire damages your home, you have to live somewhere else while its repaired risk management - ANSWER-process that identifies loss exposures faced by an organ