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CPCU555 PERSONAL RISK MANAGEMENT
& PROPERTY- CASUALTY INSURANCE
QUESTIONS WITH DETAILED VERIFIED
ANSWERS
Property Loss Exposure Ans: 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) Ans: Tangible property consisting of land, all
structures permanently attached to the land, and whatever is growing on
the land.
Personal Property Ans: All tangible or intangible property that is not real
property.
Liability Loss Exposure Ans: 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 Ans: 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 Ans: A monetary award to compensate a victim for
losses, such as pain and suffering, that do not involve specific
measurable expenses.
Specific Damages (Compensatory Damages) Ans: 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) Ans: A payment awarded by a
court to punish a defendant for a reckless, malicious, or deceitful act to
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deter similar conduct; the award need not bear any relation to a party's
actual damages.
Civil Law Ans: 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 Ans: A wrongful act or an infringement of a right (other than under
contract) leading to civil legal liability.
Negligence Ans: The failure to exercise the standard of care that a
reasonable person in a similar situation would exercise to avoid harming
others.
Risk Management Process Ans: The method of making, implementing,
and monitoring decisions that minimize the adverse effects of risk on an
organization.
1. Identifying loss exposures
2. Analyzing loss exposures
3. Examining feasibility of risk management techniques
4. Selecting the appropriate risk management techniques
5. Implementing selected risk management techniques
6. Monitoring results and revising the risk management program
Risk Control Ans: A conscious act or decision not to act that reduces the
frequency and/or severity of losses or makes losses more predictable.
Avoidance, loss prevention, loss reduction, separation, duplication,
diversification
Risk Financing Ans: A conscious act or decision not to act that generates
the funds to pay for losses and risk control measures or to offset
variability in cash flows (pays for losses that occur despite controls).
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Transfer, retention
Avoidance Ans: A risk control technique that involves ceasing or never
undertaking an activity so that the possibility of a future loss occurring
from that activity is eliminated.
Loss Prevention Ans: A risk control technique that reduces the frequency
of a particular loss.
Loss Reduction Ans: A risk control technique that reduces the severity of
a particular loss.
Separation Ans: A risk control technique that isolates loss exposures
from one another to minimize the adverse effect of a single loss
(decreases severity, may increase frequency)
Duplication Ans: A risk control technique that uses backups, spares, or
copies of critical property, information, or capabilities and keeps them in
reserve.
Diversification Ans: A risk control technique that spreads loss exposures
over numerous projects, products, markets, or regions (decreases
severity, may increase frequency)
Retention Ans: A risk financing technique by which losses are retained
by generating funds within the organization to pay for the losses.
Insurance Ans: A risk management technique that transfers the
potential financial consequences of certain specified loss exposures from
the insured to the insurer.
Transfer Ans: In the context of risk management, a risk financing
technique by which the financial responsibility for losses and variability in
cash flows is shifted to another party.
Loss Control Ans: A risk management technique to reduce loss
frequency or loss severity.
CPCU555 PERSONAL RISK MANAGEMENT
& PROPERTY- CASUALTY INSURANCE
QUESTIONS WITH DETAILED VERIFIED
ANSWERS
Property Loss Exposure Ans: 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) Ans: Tangible property consisting of land, all
structures permanently attached to the land, and whatever is growing on
the land.
Personal Property Ans: All tangible or intangible property that is not real
property.
Liability Loss Exposure Ans: 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 Ans: 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 Ans: A monetary award to compensate a victim for
losses, such as pain and suffering, that do not involve specific
measurable expenses.
Specific Damages (Compensatory Damages) Ans: 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) Ans: A payment awarded by a
court to punish a defendant for a reckless, malicious, or deceitful act to
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deter similar conduct; the award need not bear any relation to a party's
actual damages.
Civil Law Ans: 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 Ans: A wrongful act or an infringement of a right (other than under
contract) leading to civil legal liability.
Negligence Ans: The failure to exercise the standard of care that a
reasonable person in a similar situation would exercise to avoid harming
others.
Risk Management Process Ans: The method of making, implementing,
and monitoring decisions that minimize the adverse effects of risk on an
organization.
1. Identifying loss exposures
2. Analyzing loss exposures
3. Examining feasibility of risk management techniques
4. Selecting the appropriate risk management techniques
5. Implementing selected risk management techniques
6. Monitoring results and revising the risk management program
Risk Control Ans: A conscious act or decision not to act that reduces the
frequency and/or severity of losses or makes losses more predictable.
Avoidance, loss prevention, loss reduction, separation, duplication,
diversification
Risk Financing Ans: A conscious act or decision not to act that generates
the funds to pay for losses and risk control measures or to offset
variability in cash flows (pays for losses that occur despite controls).
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Transfer, retention
Avoidance Ans: A risk control technique that involves ceasing or never
undertaking an activity so that the possibility of a future loss occurring
from that activity is eliminated.
Loss Prevention Ans: A risk control technique that reduces the frequency
of a particular loss.
Loss Reduction Ans: A risk control technique that reduces the severity of
a particular loss.
Separation Ans: A risk control technique that isolates loss exposures
from one another to minimize the adverse effect of a single loss
(decreases severity, may increase frequency)
Duplication Ans: A risk control technique that uses backups, spares, or
copies of critical property, information, or capabilities and keeps them in
reserve.
Diversification Ans: A risk control technique that spreads loss exposures
over numerous projects, products, markets, or regions (decreases
severity, may increase frequency)
Retention Ans: A risk financing technique by which losses are retained
by generating funds within the organization to pay for the losses.
Insurance Ans: A risk management technique that transfers the
potential financial consequences of certain specified loss exposures from
the insured to the insurer.
Transfer Ans: In the context of risk management, a risk financing
technique by which the financial responsibility for losses and variability in
cash flows is shifted to another party.
Loss Control Ans: A risk management technique to reduce loss
frequency or loss severity.
