CAIB 1 Chapter 1
Comprehensive Questions
(Frequently Tested) with
Verified Answers Graded
A+
[Document subtitle]
[DATE]
[COMPANY NAME]
[Company address]
, Contact for further consultation
1. Define in pure insurance terms "risk." Answer: The chance of financial loss to which
an object of insurance is exposed.
2. List the three categories of risk generally faced by people. Answer: Personal
- loss of health/life Property - objects
Liability - negligent actions result in injury/damage
3. State 4 possible options people can chose to deal with risk and
give a brief explanation and example of each. Answer: Avoidance - all chance of
financial loss has been eliminated Controlling - taking measures to reduce the frequency and
severity of losses
Retention - keeping the risk deductibles
Transfer - to others, in exchange for
premium
4. Give 2 examples of loss control measures that can be taken to
reduce the frequency and severity of losses Answer: Installing intrusion detection
equipment, installing fire detection equipment
5. State 2 reasons why loss control measures are not a total solution
in elimi- nating financial loss Answer: Equipment will not work 100% of the time, certain
, Contact for further consultation
types of losses cannot be ettectively controlled (wind, lightening)
6. Which of the four possible options is generally not an effective
means of dealing with risk? Answer: Avoidance
7. Which of the four possible options is popular and practical means
of dealing with risk? Answer: Transfer
8. Explain, using an example of speculative risk Answer: Involves risk of
financial gain OR loss. Ex. Gambling can win or lose
9. Explain, using an example of pure risk Answer: Involves chance of only loss.
Ex. Owning a house the chance it might burn.
10. Which of these types of risk will insurers not provide an
insurance policy to? Answer: Speculative
11. A contract is an agreement between 2 or more persons which
creates an obligation to do or not do a particular thing. All contracts
contain 5 elements. Identify and explain these five elements. Answer:
Agreement - Must be a meeting of minds as to the subject matter and terms of the
contract.
a. An otter made
Comprehensive Questions
(Frequently Tested) with
Verified Answers Graded
A+
[Document subtitle]
[DATE]
[COMPANY NAME]
[Company address]
, Contact for further consultation
1. Define in pure insurance terms "risk." Answer: The chance of financial loss to which
an object of insurance is exposed.
2. List the three categories of risk generally faced by people. Answer: Personal
- loss of health/life Property - objects
Liability - negligent actions result in injury/damage
3. State 4 possible options people can chose to deal with risk and
give a brief explanation and example of each. Answer: Avoidance - all chance of
financial loss has been eliminated Controlling - taking measures to reduce the frequency and
severity of losses
Retention - keeping the risk deductibles
Transfer - to others, in exchange for
premium
4. Give 2 examples of loss control measures that can be taken to
reduce the frequency and severity of losses Answer: Installing intrusion detection
equipment, installing fire detection equipment
5. State 2 reasons why loss control measures are not a total solution
in elimi- nating financial loss Answer: Equipment will not work 100% of the time, certain
, Contact for further consultation
types of losses cannot be ettectively controlled (wind, lightening)
6. Which of the four possible options is generally not an effective
means of dealing with risk? Answer: Avoidance
7. Which of the four possible options is popular and practical means
of dealing with risk? Answer: Transfer
8. Explain, using an example of speculative risk Answer: Involves risk of
financial gain OR loss. Ex. Gambling can win or lose
9. Explain, using an example of pure risk Answer: Involves chance of only loss.
Ex. Owning a house the chance it might burn.
10. Which of these types of risk will insurers not provide an
insurance policy to? Answer: Speculative
11. A contract is an agreement between 2 or more persons which
creates an obligation to do or not do a particular thing. All contracts
contain 5 elements. Identify and explain these five elements. Answer:
Agreement - Must be a meeting of minds as to the subject matter and terms of the
contract.
a. An otter made
