NC Property and Casualty State Exam Questions with Answers 100% Correct || (2024) Certified!!!

Insurance - - a plan of spreading the risk of possible loss over a large number of people (Law of Large Numbers) - protects against the risk (uncertainty) of when a financial loss might occur Speculative Risk - - when there is a chance of gain as well as a chance of loss (ex: buying a stock, gambling) - insurance IS NOT intended to protect against this Pure Risk - - when there is a chance of loss only - not all pure risks are insurable Insurable Risk - - a risk the insurance company is willing to accept - characteristics of an insurable risk 1. Low probability of a loss occurring 2. Less than catastrophic results 3. The loss must be measurable 4. The loss must be significant 5. The loss must be accidental and unintended Law of Large Numbers - - makes it possible to predict future losses based upon prior experience - law states that as a large # of events are included, the difference between actual and expected results become smaller