Michigan Property & Casualty Insurance
Exam Questions And Answers
Risk - correct answer ✅The possibility that a loss will occur
Speculative Risk - correct answer ✅Chance of loss or gain
Pure Risk - correct answer ✅only the possibility of loss
Peril - correct answer ✅cause of loss
Exposure - correct answer ✅The potential for accidents and other
losses
Direct Loss - correct answer ✅Loss that is a direct result of a peril, such
as fire.
Indirect Loss - correct answer ✅Loss that is a result or consequence of
a direct loss
Moral Hazard - correct answer ✅Arise from a person's character
(dishonesty)
Morale Hazard - correct answer ✅A condition of carelessness or
indifference that increases the frequency or severity of loss.
,Michigan Property & Casualty Insurance
Exam Questions And Answers
Physical Hazard - correct answer ✅a physical condition that increases
the frequency or severity of loss
Sharing risk - correct answer ✅Two or more individuals share risk
transfer risk - correct answer ✅The purpose of insurance
Avoidance - correct answer ✅eliminating certain risk by not engaging
in certain activity
Retention - correct answer ✅Self-insurance, person will pay for loss
Reduction - correct answer ✅Lessening the possibility or severity of a
loss.
Law of Large Numbers - correct answer ✅A principle stating that the
larger the number of similar exposure units considered, the more
closely the losses reported will equal the underlying probability of loss.
Elements of Insurable Risk - correct answer ✅Calculable
Affordable
, Michigan Property & Casualty Insurance
Exam Questions And Answers
Non-catastrophic
Homogeneous
Accidental
Measurable
Adverse Selection - correct answer ✅risks that have a greater than
average chance of loss
Reinsurancd - correct answer ✅Transfers risk from one insurer to
another
Stock Insurer - correct answer ✅Owned by stockholders
Mutual Insurer - correct answer ✅owned by policyholders
Fraternal Benefit Society - correct answer ✅An insurance company
formed to provide insurance for members of an affiliated lodge,
religious, or fraternal organization with a representative form of
government.
Reciprocal Insurers - correct answer ✅are unincorporated groups of
individual members that provide insurance for other members through
Exam Questions And Answers
Risk - correct answer ✅The possibility that a loss will occur
Speculative Risk - correct answer ✅Chance of loss or gain
Pure Risk - correct answer ✅only the possibility of loss
Peril - correct answer ✅cause of loss
Exposure - correct answer ✅The potential for accidents and other
losses
Direct Loss - correct answer ✅Loss that is a direct result of a peril, such
as fire.
Indirect Loss - correct answer ✅Loss that is a result or consequence of
a direct loss
Moral Hazard - correct answer ✅Arise from a person's character
(dishonesty)
Morale Hazard - correct answer ✅A condition of carelessness or
indifference that increases the frequency or severity of loss.
,Michigan Property & Casualty Insurance
Exam Questions And Answers
Physical Hazard - correct answer ✅a physical condition that increases
the frequency or severity of loss
Sharing risk - correct answer ✅Two or more individuals share risk
transfer risk - correct answer ✅The purpose of insurance
Avoidance - correct answer ✅eliminating certain risk by not engaging
in certain activity
Retention - correct answer ✅Self-insurance, person will pay for loss
Reduction - correct answer ✅Lessening the possibility or severity of a
loss.
Law of Large Numbers - correct answer ✅A principle stating that the
larger the number of similar exposure units considered, the more
closely the losses reported will equal the underlying probability of loss.
Elements of Insurable Risk - correct answer ✅Calculable
Affordable
, Michigan Property & Casualty Insurance
Exam Questions And Answers
Non-catastrophic
Homogeneous
Accidental
Measurable
Adverse Selection - correct answer ✅risks that have a greater than
average chance of loss
Reinsurancd - correct answer ✅Transfers risk from one insurer to
another
Stock Insurer - correct answer ✅Owned by stockholders
Mutual Insurer - correct answer ✅owned by policyholders
Fraternal Benefit Society - correct answer ✅An insurance company
formed to provide insurance for members of an affiliated lodge,
religious, or fraternal organization with a representative form of
government.
Reciprocal Insurers - correct answer ✅are unincorporated groups of
individual members that provide insurance for other members through
