CPCU 553 - chapter 1 Exam Questions with 100% Correct Answers

CPCU 553 - chapter 1 Exam Questions with 100% Correct Answers Loss Exposure - Answer ️️ -Any condition or situation that presents a possibility of loss, whether or not an actual loss occurs. The three elements of loss exposure - Answer ️️ -A loss exposure is given by the following three elements: asset exposed to loss, cause of loss, financial consequence of loss What is an asset exposed to loss? Give examples. - Answer ️️ -An asset exposed to loss can be any item with value that is exposed to a possible reduction in that value due to loss. (Examples: home, personal property, money, automobiles, worker's income, investment pfo, health) What is the definition of a (Property) Cause of loss (peril). Give examples. - Answer ️️ -The actual means by which property is damaged or destroyed. (Example: fire, wind, hail, theft, auto collision, loss of employment, long-term illness) The financial consequences of loss are dependent on what factors? - Answer ️️ -The financial consequences of a loss depend on the type of asset exposed to loss, the cause of loss, and the severity of the loss. Property Loss Exposure (formal definition) - Answer ️️ -A condition that presents the possibility that a person or an organization will sustain a loss resulting from damage (including destruction, taking, or loss of use) to property in which that person or organization has a financial interest. Real property (realty) - Answer ️️ -Tangible property consisting of land, all structures permanently attached to the land, and whatever is growing on the land. Personal Property - Answer ️️ -All tangible or intangible property that is not real property. What is a property loss exposure? - Answer ️️ -A property loss exposure is any condition or situation that represents the possibility of a property loss. What are the two types of property that individuals and families own that may be exposed to loss? - Answer ️️ -Real property and personal property. What are the three financial consequences of a property loss? - Answer ️️ -Reduction in property value, increased (living) expenses, lost income Liability loss exposure - Answer ️️ -Any condition or situation that presents the possibility of a claim alleging legal responsibility of a person or business for injury or damage suffered by another party. Damages - Answer ️️ -Money claimed by, or a monetary award to, a party who has suffered bodily injury or property damage for which another party is legally responsible. General Damages - Answer ️️ -A monetary award to compensate a victim for losses, such as pain and suffering, that do not involve specific measurable expenses. Special Damages - Answer ️️ -A form of compensatory damages that awards a sum of money for specific, identifiable expenses associated with the injured person's loss, such as medical expenses or lost wages. Punitive damages (exemplary damages) - Answer ️️ -A payment awarded by a court to punish a defendant for a reckless, malicious, or deceitful act to deter similar conduct; the award need not bear any relation to a party's actual damages. Civil Law - Answer ️️ -A classification of law that applies to legal matters not governed by criminal law and that protects rights and provides remedies for breaches of duties owed to others. Tort - Answer ️️ -A wrongful act or an omission, other than a crime or a breach of contract, that invades a legally protected right. Negligence - Answer ️️ -The failure to exercise the standard of care that a reasonable person would exercise in similar circumstances. Identify the assets exposed to loss in a liability loss exposure. - Answer ️️ -The assets exposed to loss in a liability loss exposure are money or other financial assets. Identify the cause of loss associated with a liability loss exposure. - Answer ️️ -The cause of loss associated with a liability loss exposure is the claim of liability or the filing of a lawsuit. Describe the two main financial consequences of a liability loss exposure. - Answer ️️ -1. Cost of investigation and defense, 2. money damages awarded if the defense is not successful or if the claim is settled out of court What are the most common personal liability claims? - Answer ️️ -1. Tort liability (auto accident) 2. Breach of contract (rent) 3. Statutory liability (sidewalk) What are the sources of tort liability? - Answer ️️ -1. Negligence 2. Intentional torts 3. Absolute liability Identify the four elements of negligence. - Answer ️️ -1. A duty t