1
Michigan Property & Casualty Insurance Exam
Questions and Answers (100% Pass)
Risk - (answer)The possibility that a loss will occur
Speculative Risk - (answer)Chance of loss or gain
Pure Risk - (answer)only the possibility of loss
Peril - (answer)cause of loss
Exposure - (answer)The potential for accidents and other losses
Direct Loss - (answer)Loss that is a direct result of a peril, such as fire.
Indirect Loss - (answer)Loss that is a result or consequence of a direct loss
Moral Hazard - (answer)Arise from a person's character (dishonesty)
Morale Hazard - (answer)A condition of carelessness or indifference that
increases the frequency or severity of loss.
, 2
Physical Hazard - (answer)a physical condition that increases the frequency or
severity of loss
Sharing risk - (answer)Two or more individuals share risk
transfer risk - (answer)The purpose of insurance
Avoidance - (answer)eliminating certain risk by not engaging in certain activity
Retention - (answer)Self-insurance, person will pay for loss
Reduction - (answer)Lessening the possibility or severity of a loss.
Law of Large Numbers - (answer)A principle stating that the larger the number
of similar exposure units considered, the more closely the losses reported will
equal the underlying probability of loss.
Elements of Insurable Risk - (answer)Calculable
Affordable
Non-catastrophic
Homogeneous
Michigan Property & Casualty Insurance Exam
Questions and Answers (100% Pass)
Risk - (answer)The possibility that a loss will occur
Speculative Risk - (answer)Chance of loss or gain
Pure Risk - (answer)only the possibility of loss
Peril - (answer)cause of loss
Exposure - (answer)The potential for accidents and other losses
Direct Loss - (answer)Loss that is a direct result of a peril, such as fire.
Indirect Loss - (answer)Loss that is a result or consequence of a direct loss
Moral Hazard - (answer)Arise from a person's character (dishonesty)
Morale Hazard - (answer)A condition of carelessness or indifference that
increases the frequency or severity of loss.
, 2
Physical Hazard - (answer)a physical condition that increases the frequency or
severity of loss
Sharing risk - (answer)Two or more individuals share risk
transfer risk - (answer)The purpose of insurance
Avoidance - (answer)eliminating certain risk by not engaging in certain activity
Retention - (answer)Self-insurance, person will pay for loss
Reduction - (answer)Lessening the possibility or severity of a loss.
Law of Large Numbers - (answer)A principle stating that the larger the number
of similar exposure units considered, the more closely the losses reported will
equal the underlying probability of loss.
Elements of Insurable Risk - (answer)Calculable
Affordable
Non-catastrophic
Homogeneous
