HS 311 Fundamentals of Insurance Planning| Questions with 100 % correct Answers | Verified

What is the definition of "risk"? - the possibility of loss. Types of hazards? - Physical, attitudinal (carelessness), and moral. How do insurance companies measure probabilities? - By observing large numbers (mass) of similar (homogeneous) exposures in the statistical group from which they make their estimate. What is the definition of "particular risk"? - Loss possibilities that affect only individuals or small groups of individuals at the same time What is the definition of "fundamental risk"? - Loss possibilities that can affect large segments of society at the same time. What is the definition of "pure risk"? - Loss or no loss What is the definition of "speculative risk"? - Possibility of loss, no loss, or gain Pure risk categories include? - Risks involving the person, risks involving loss of or damage to property, and risks involving liability for injury or damage to persons or the property of others. 5 requirements that a risk must meet? - Important, accidental nature, calculable, definite, and cannot be excessively catastrophic. What is an indirect loss? - Lost profits following a direct loss. 3 factors that add to the costs of risks? - Fear and worry, inadequate preparation, and expenses of managing risks