PROPERTY AND CASUALTY
PRINCIPLES STUDY HELP CHAPTERS
#1-4 EXAM QUESTIONS WITH
COMPLETE ANSWERS
Suppose a business was uninsured and failed to reopen after it was destroyed by a fire.
Which of these statements is NOT correct?
A) The local government that received tax revenue from the business would be affected
by this loss.
B) only the owner of the restaurant would be affected by this loss.
C) The owners would had their money invested in the business would be affected by
this loss.
D) The suppliers who sold goods and services to the business would be affected by this
loss. - Answer-B
Which one of the following statements is not true about the benefits of insurance
ownership?
A) The benefits of insurance flow only to those who own it.
B) The public benefits from the large amount of tax revenue that are generated by
insurance activates.
C) The economy benefits from the large amount of capital invested by insurance
companies.
D) Communities benefit from insurance ownership by businesses because a flow of
economic activity can resume more quickly after a loss. - Answer-A
Which of the following involves risk?
A) John pays $25 towards the balance on his gasoline credit card.
B) Mary throws a silver dollar into a wishing well.
C) Ted, in slippery shoes, is carrying a valuable cut-glass antique vase across a
smooth, wet concrete floor.
D) All of these. - Answer-C
Which of the following has a greater probability of occurring?
A) falling off a bridge by noon tomorrow.
B) Getting sick and missing work at some point in your career. - Answer-B
Bill purchases a motorcycle and has it insured using the definition of risk we have just
discussed what is the risk in this situation?
A) Bill
B) The motorcycle - Answer-B
,After watering your lawn, you leave your garden hose lying dangerously across from
front steps. A visitor trips over the hose, falls, and breaks an arm. This is an example
of?
A) Personal risk
B) Property Risk
C) Liability risk
D) none of these - Answer-C
You are standing at the top of a ladder painting the side of your house and leaning way
over to reach a corner this is an example of
A) Personal risk
B) Property Risk
C) Liability risk
D) none of these - Answer-A
You forgot to turn off a burner on your gas stov3e before you leave the house for work.
A breeze wafts the kitchen curtains towards the open flame. This is an example of
A) Personal risk
B) Property Risk
C) Liability risk
D) none of these - Answer-B
Match the description at left with the method of managing risk at right
1) Avoid Risk
2) Control Risk
3) Retain Risk
4) Transfer Risk
A) George always wears his seat belt in the car
B) Terry has no collision coverage on her car
C) Heidi insures her $10,000 diamond bracelet for its full value
D) A pharmaceutical company decides not to manufacture a drug after clinical trails
show the drug has serious potential side effects. - Answer-A) 2 B) 3 C)4 D) 1
Ture or false? One of the principles of insurance is that many people share the losses of
a few. - Answer-True
Which group of words could best be used to construct a definition of insurance?
A) Device to ensure that property remains in good condition returns more to the insured
than was paid in.
B) Savings account many pay in at least the amount paid in is returned to the individual.
C) Transfers risk of loss many share the losses of a few.
D) Money paid to a company paid back to an individual for any loss certainty for
certainty - Answer-C
, Suppose an insurance company insured every home in just one small town. It has
changed a premium based upon statics developed using millions of homes over wide
areas of the country. Select the CORRECT statement.
A) The losses in the town will probably not be the same as the statistic, and the
company's actual loss experience will be somewhat different from what it expected.
B) The losses in the town probably will be the same as the statistic and the company's
actual loss experience will be almost exactly as expected. - Answer-A
How could a company afford to insure homes along the Florida coast against property
damage?
A) By limiting the number of homes it insures in this area
B) By insuring homes in other areas that are not subject to hurricanes.
C) Both statements are correct
D) Neither statement is correct - Answer-C
Suppose that the millions of families in the country desired to obtain insurance against
the possibility that fire might destroy their homes. Are there sufficient numbers of people
involved to make this an insurable risk?
Yes or no - Answer-Yes
Imagine that all motorists wanted insurance to pay for damages if the wind shields in
their automobiles are broken.
Are there sufficient numbers of people to make this an insurable risk?
Yes or NO
If a loss occurs is it definite?
Yes or no - Answer-Yes Yes
Suppose people wanted insurance to have a new paint job done on their automobile if a
vandal scraped the car all over with a nail. Which of the following statements is correct?
A) This loss is accidental from the insured's point of view.
B) This loss is insurable.
C) Both statements are correct.
D) Neither statements is correct. - Answer-C
Suppose that parents across the country want insurance coverage to reimburse them
for the cost of replacing the pens and pencils their children lose in school each year.
Why would this type of loss NOT be insurable?
A) There are not enough persons involved to make the risk insurable.
B) The loss is not definite
C) The loss is not accidental
D) The loss is not large enough to create a finical burden. - Answer-D
Suppose a man wants to buy insurance on an old barn that's valued at $2,000. The
premium for this coverage is $1,500 a year. is this insurance a wise buy for the man?
Yes or NO - Answer-No
PRINCIPLES STUDY HELP CHAPTERS
#1-4 EXAM QUESTIONS WITH
COMPLETE ANSWERS
Suppose a business was uninsured and failed to reopen after it was destroyed by a fire.
Which of these statements is NOT correct?
A) The local government that received tax revenue from the business would be affected
by this loss.
B) only the owner of the restaurant would be affected by this loss.
C) The owners would had their money invested in the business would be affected by
this loss.
D) The suppliers who sold goods and services to the business would be affected by this
loss. - Answer-B
Which one of the following statements is not true about the benefits of insurance
ownership?
A) The benefits of insurance flow only to those who own it.
B) The public benefits from the large amount of tax revenue that are generated by
insurance activates.
C) The economy benefits from the large amount of capital invested by insurance
companies.
D) Communities benefit from insurance ownership by businesses because a flow of
economic activity can resume more quickly after a loss. - Answer-A
Which of the following involves risk?
A) John pays $25 towards the balance on his gasoline credit card.
B) Mary throws a silver dollar into a wishing well.
C) Ted, in slippery shoes, is carrying a valuable cut-glass antique vase across a
smooth, wet concrete floor.
D) All of these. - Answer-C
Which of the following has a greater probability of occurring?
A) falling off a bridge by noon tomorrow.
B) Getting sick and missing work at some point in your career. - Answer-B
Bill purchases a motorcycle and has it insured using the definition of risk we have just
discussed what is the risk in this situation?
A) Bill
B) The motorcycle - Answer-B
,After watering your lawn, you leave your garden hose lying dangerously across from
front steps. A visitor trips over the hose, falls, and breaks an arm. This is an example
of?
A) Personal risk
B) Property Risk
C) Liability risk
D) none of these - Answer-C
You are standing at the top of a ladder painting the side of your house and leaning way
over to reach a corner this is an example of
A) Personal risk
B) Property Risk
C) Liability risk
D) none of these - Answer-A
You forgot to turn off a burner on your gas stov3e before you leave the house for work.
A breeze wafts the kitchen curtains towards the open flame. This is an example of
A) Personal risk
B) Property Risk
C) Liability risk
D) none of these - Answer-B
Match the description at left with the method of managing risk at right
1) Avoid Risk
2) Control Risk
3) Retain Risk
4) Transfer Risk
A) George always wears his seat belt in the car
B) Terry has no collision coverage on her car
C) Heidi insures her $10,000 diamond bracelet for its full value
D) A pharmaceutical company decides not to manufacture a drug after clinical trails
show the drug has serious potential side effects. - Answer-A) 2 B) 3 C)4 D) 1
Ture or false? One of the principles of insurance is that many people share the losses of
a few. - Answer-True
Which group of words could best be used to construct a definition of insurance?
A) Device to ensure that property remains in good condition returns more to the insured
than was paid in.
B) Savings account many pay in at least the amount paid in is returned to the individual.
C) Transfers risk of loss many share the losses of a few.
D) Money paid to a company paid back to an individual for any loss certainty for
certainty - Answer-C
, Suppose an insurance company insured every home in just one small town. It has
changed a premium based upon statics developed using millions of homes over wide
areas of the country. Select the CORRECT statement.
A) The losses in the town will probably not be the same as the statistic, and the
company's actual loss experience will be somewhat different from what it expected.
B) The losses in the town probably will be the same as the statistic and the company's
actual loss experience will be almost exactly as expected. - Answer-A
How could a company afford to insure homes along the Florida coast against property
damage?
A) By limiting the number of homes it insures in this area
B) By insuring homes in other areas that are not subject to hurricanes.
C) Both statements are correct
D) Neither statement is correct - Answer-C
Suppose that the millions of families in the country desired to obtain insurance against
the possibility that fire might destroy their homes. Are there sufficient numbers of people
involved to make this an insurable risk?
Yes or no - Answer-Yes
Imagine that all motorists wanted insurance to pay for damages if the wind shields in
their automobiles are broken.
Are there sufficient numbers of people to make this an insurable risk?
Yes or NO
If a loss occurs is it definite?
Yes or no - Answer-Yes Yes
Suppose people wanted insurance to have a new paint job done on their automobile if a
vandal scraped the car all over with a nail. Which of the following statements is correct?
A) This loss is accidental from the insured's point of view.
B) This loss is insurable.
C) Both statements are correct.
D) Neither statements is correct. - Answer-C
Suppose that parents across the country want insurance coverage to reimburse them
for the cost of replacing the pens and pencils their children lose in school each year.
Why would this type of loss NOT be insurable?
A) There are not enough persons involved to make the risk insurable.
B) The loss is not definite
C) The loss is not accidental
D) The loss is not large enough to create a finical burden. - Answer-D
Suppose a man wants to buy insurance on an old barn that's valued at $2,000. The
premium for this coverage is $1,500 a year. is this insurance a wise buy for the man?
Yes or NO - Answer-No
