WebCE Property & Casualty Prep Exam with Complete Solutions.

Risk - ANSWER-Chance of loss 5 Risk or Loss Factors - ANSWER-1. Risk 2. Loss 3. Exposure 4. Peril 5. Hazard Insurance allows: - ANSWER-Individual or group to transfer over to insurance company the risk of financial loss from a destructive event Fundamental purpose of insurance is: - ANSWER-To indemnify policyholder against covered losses or restore policyholder back to same financial position they were in before Insurance companies may used term risks to refer to insured: - ANSWER-1. Person 2. Property 3. Activity Loss - ANSWER-Unplanned or unwelcome reduction in economic value What is Direct and Indirect loss - ANSWER-1. Direct loss - immediate result of and event caused by a covered peril 2. Indirect loss - remote result of an event caused by covered peril Exposure - ANSWER-State of being subject to a possible loss Insurer measures exposure by - ANSWER-Units to the person, property or event (more exposure units, the greater the premium) Exposure is also referred to as: - ANSWER-Total risk an insurer faces with insured Peril - ANSWER-The destructive event that insurance guards against 6 types of peril - ANSWER-1. Fire 2. Explosion 3. Windstorm 4. Flood 5.Theft 6. Collision Insurance policy provides - ANSWER-Financial protection against losses caused by specified peril Havard - ANSWER-Is condition that increases the likely occurrence of a peril or severity of a loss