RMIN 4000 Ragin Exam 1 Questions and Answers 100% Correct!

worker's compensation - ANSWER-employee injuries can have compensation in a percentage of lost wages, medical payment/care, death benefits, and body part payments Terrorism Risk & Insurance Act (2002) - ANSWER-federal backstop for terrorism losses where the gov't pays a % of losses above a certain amount -will have to be renewed several times -currently 85% of losses above $100 million risk - ANSWER-a calculated possibility of a negative outcome calculated possibility - ANSWER-probabilistic outcome (chance/likelihood) that is known or estimated -sometimes easier/harder -ranges from 0% to 100% negative outcome - ANSWER-loss must be quantifiable RISK - ANSWER-LOSS + LIABILITY pure risk - ANSWER-2 future states of the world 1. Nothing 2. Loss Major types: - Personal Risk - Property Risk - Liability Risk speculative risk - ANSWER-3 future states of the world 1. Loss 2. Nothing 2. Gain Example: Gambling, marriage, investing, college, robbing a bank Can you buy insurance for pure risks? - ANSWER-Yes, typically but some types can be hard to insure Can you buy insurance for speculative risks? - ANSWER-Generally No, but usually you can take some off setting gambles Why can't you buy insurance for speculative risks? - ANSWER-It can cause