ABRC P/C Insurance Program Review – Questions
With Verified Solutions
Insurance Policy Correct Answer - Legal contract for the
transfer of financial risks.
Transfer of risk Correct Answer - Individuals transfer to
insurance companies financial risks they cannot individually afford.
Pure Risk Correct Answer - When a person can only stand to
lose should an event occur.
Ex. building being damaged by fire.
Speculative Risk Correct Answer - When there is also an
opportunity to gain should an event occur as well as a risk of losing.
(not often covered by insurance companies)
Ex. betting on a ball game
Pooling of Risks Correct Answer - Is when a large group of
people contribute money to a fund out of which their losses can be
paid. The larger the group, the better it works financially
The Premium Correct Answer - an amount to be paid for an
insurance policy.
A Lapse Correct Answer - A policy is terminated due to
nonpayment of premiums.
Insured Correct Answer - A person covered by an insurance
policy
, Endorsement Correct Answer - form added to an insurance
policy for an additional premium to add additional coverage.
A Peril Correct Answer - actual cause of loss that can be
insured against.
A Hazard Correct Answer - condition or operation in property
which either creates or increases the chance of loss.
Risk Correct Answer - Likelihood, probability, or degree of
uncertainty that a covered peril will cause a loss.
Actuarial Tables Correct Answer - statistical tables used in
calculation premium rate tables
Loss Reserves Correct Answer - moneys set aside to pay claims
in accordance with the actuarial tables
Actuary Correct Answer - Representative who keeps track of
loss statistics
Law of Large Numbers Correct Answer - The more people the
insurance company insures, the more accurate the actuarial tables
will be
Insurable Interest Correct Answer - Financial interest (risk)
which the insured must possess at the time the policy is issued to
qualify to purchase the policy as well as at the time of loss to qualify
to make a claim.
Indemnity Correct Answer - standing in the place of or making
good for another
Indemnify Correct Answer - reimburse
With Verified Solutions
Insurance Policy Correct Answer - Legal contract for the
transfer of financial risks.
Transfer of risk Correct Answer - Individuals transfer to
insurance companies financial risks they cannot individually afford.
Pure Risk Correct Answer - When a person can only stand to
lose should an event occur.
Ex. building being damaged by fire.
Speculative Risk Correct Answer - When there is also an
opportunity to gain should an event occur as well as a risk of losing.
(not often covered by insurance companies)
Ex. betting on a ball game
Pooling of Risks Correct Answer - Is when a large group of
people contribute money to a fund out of which their losses can be
paid. The larger the group, the better it works financially
The Premium Correct Answer - an amount to be paid for an
insurance policy.
A Lapse Correct Answer - A policy is terminated due to
nonpayment of premiums.
Insured Correct Answer - A person covered by an insurance
policy
, Endorsement Correct Answer - form added to an insurance
policy for an additional premium to add additional coverage.
A Peril Correct Answer - actual cause of loss that can be
insured against.
A Hazard Correct Answer - condition or operation in property
which either creates or increases the chance of loss.
Risk Correct Answer - Likelihood, probability, or degree of
uncertainty that a covered peril will cause a loss.
Actuarial Tables Correct Answer - statistical tables used in
calculation premium rate tables
Loss Reserves Correct Answer - moneys set aside to pay claims
in accordance with the actuarial tables
Actuary Correct Answer - Representative who keeps track of
loss statistics
Law of Large Numbers Correct Answer - The more people the
insurance company insures, the more accurate the actuarial tables
will be
Insurable Interest Correct Answer - Financial interest (risk)
which the insured must possess at the time the policy is issued to
qualify to purchase the policy as well as at the time of loss to qualify
to make a claim.
Indemnity Correct Answer - standing in the place of or making
good for another
Indemnify Correct Answer - reimburse
