Exam Fx (PROPERTY & CASUALTY)| 117 QUESTIONS| WITH COMPLETE SOLUTIONS

The larger the number of people with a similar exposure to loss, the more predictable actual losses will be. correct answer: Law of Large Numbers Transfers the risk of loss from an individual or business entity to an insurance company correct answer: Insurance 1) Financial 2) Blood (relative) 3) Business correct answer: The three elements of insurable risk are The uncertainty or chance of a loss occurring correct answer: Risk 1) Pure risk 2) Speculative risk correct answer: Types of risks are Pure risk correct answer: What type of risk does insurance cover? It can only result in a loss or no change correct answer: What is pure risk? speculative risk correct answer: What type of risk is not insurable? Opportunity for loss or gain. For example, gambling. correct answer: What is speculative risk? a specific cause of loss correct answer: What is a peril? conditions or situations that increase the probability of a loss occurring correct answer: What is a hazard? reduction, decrease or disappearance of value of the person or property insured. correct answer: What is a loss? provision in an insurance policy that states that in the event of loss, an insured can only collect to the extent of the financial loss. The insured is not allowed to gain financially. correct answer: What is indemnity? insurer's legal right to seek damages from third parties after it has reimbursed the insured. correct answer: Subrogation The sudden, unplanned and unexpected event not under the control of the insured. Neither expected or intended. correct answer: Accident losses caused by continuous or repeated exposure to conditions neither intended or expected. correct answer: Occurrence direct, physical damage to buildings and/or personal property correct answer: Direct loss results of a direct loss correct answer: Indirect Loss (consequential) Extra living expense that may be incurred by the insure