As a single mother on a very tight budget, Ciara is tempted to skimp on her insurance. However, her
friend Mehmet tells her not to skimp on insurance, because it will help manage her cash flows. Which one
of the following examples best illustrates Mehmet's point?
A. Ciara needs her car to get to her job, and she needs her job to make car payments and pay for her car
insurance.
B. When her car's windshield breaks, Ciara has to pay only $100 of the $600 cost of replacing it.
C. When her car's transmission goes out a month after the warranty expires, Ciara is faced with a $1,100
repair bill.
D. Ciara finds it difficult to come up with a $787 auto insurance premium every six months. - Answer-
When her car's windshield breaks, Ciara has to pay only $100 of the $600 cost of replacing it.
Which one of the following statements is correct regarding the benefits provided by insurance?
A. Insurance reduces the financial consequences of loss exposures but not the related uncertainty.
B. The primary role of insurance is to meet mandatory insurance requirements.
C. The reduction in losses paid by insurers due to risk control measures benefits individual insureds but
not society as a whole.
D. Insurance helps reduce the financial burden to society by compensating accident victims. - Answer-
Insurance helps reduce the financial burden to society by compensating accident victims.
Shelton Industries experienced a fire in its manufacturing plant. Several employees suffered burns and
,smoke inhalation injuries as they tried to escape the building. Which one of Shelton Industries'
commercial property-casualty policies would pay for the employees' injuries and illnesses? - Answer-
Workers compensation insurance
A homeowners policy is a type of - Answer- Personal property-casualty insurance policy.
Which one of the following correctly describes a reason for government involvement in property-casualty
insurance?
,A. Selling insurance provides the government with a non-tax source of revenues and profits.
B. Government programs can meet legitimate public demands unmet by private insurers.
C. Competition from government plans keeps private insurer's premiums competitive.
D. Preventing high-risk individuals or activities from being insured is in the public interest. - Answer-
Government programs can meet legitimate public demands unmet by private insurers.
Insurance Company wrote a commercial liability policy for a manufacturer of off-road motorcycles. The
potential costs of the insured's loss exposure exceed Insurance Company's capacity. Insurance Company
could consider which one of the following types of contractual transferring agreement to meet its needs? -
Answer- Reinsurance
In an effort to reduce expenses, increase profitability, and reduce human errors; ABC Insurance Company
decided to automate most of its personal lines underwriting function. The company now uses standardized
application forms that are submitted electronically to one of the company's regional offices. At each
regional office, a computer with a scanner reads the applications. The computer has been programmed
with acceptable answers to the questions. If the answers on the application are all acceptable, the policy is
automatically issued. Rejected applications are automatically forwarded to a human underwriter who
reviews them. The use of this technology has reduced the company's expense ratio by two and a half
percent, and reduced the time it takes to issue a policy. ABC Insurance Company's use of computers to
evaluate applications electronically is an application of
A. Radiant sensors.
B. Artificial intelligence.
C. - Answer- Artificial intelligence.
Jimmy decided to buy a house in his neighborhood that had been foreclosed on by the bank that held the
mortgage. He is hoping to do some renovation and repair work on the house, and then sell it for a quick
profit. What type of risk is this? - Answer- Speculative Risk
Which one of the following best describes the concept of pooling?
A. The financial consequences of unanticipated losses are transferred to an insurer.
B. Risk management is concerned with positive and negative risks.
C. Insureds share the cost of each other's losses.
D. Insurance benefits society as a whole. - Answer- Insureds share the cost of each other's losses.
, Which none nof nthe nfollowing nrepresents nuncertainty nabout noutcomes nthat ncan nbe nnegative nor npositive?
A. Loss nexposure
B. Transfer
C. Risk
D. Pooling n- nAnswer- nRisk
Coverage nfor nmoney nand nother nbusiness nproperty nfrom nvarious ncauses nof nloss nsuch nas nburglary, nrobbery,
ntheft, nand nemployee ndishonesty ntypically nis nprovided nby n- nAnswer- nCommercial ncrime ninsurance.
The ninsurance nagent nsuggested nthat nSally's nSnack nShop nbuy na npolicy nthat ncombines nproperty, ncrime, nand
nliability ncoverages ninto none npolicy. nThis nis nreferred nto nas na(n) n- nAnswer- nCommercial nPackage nPolicy
n(CCP)
Which none nof nthe nfollowing ndescribes nthe ncharacteristics nof na nmutual ninsurance ncompany?
A. A ncorporation nowned nby npolicyholders nthat nprovides ninsurance nto nits npolicyholders.
B. An nunincorporated nassociation nthat nprovides nreciprocal ncoverage nto nsubscribers.
C. An nunincorporated nassociation nthat nearns nprofits nfor nits nindividual ninvestors.
D. A ncorporation nowned nby nstockholders nthat nearns nprofits nfor nthe nstockholders. n- nAnswer- nA
ncorporation nowned nby npolicyholders nthat nprovides ninsurance nto nits npolicyholders.
A nreinsurance ncompany
A. Assumes nloss nexposures nfrom na nprimary ninsurer.
B. Provides nprimary ninsurance nfor nloss nexposures nthat nprivate ninsurers nare nunwilling nto nprovide.
C. Is nformed nto nwrite nall nor npart nof nthe ninsurance nfor na nparent ncompany.
D. Transfers nlosses nto na nprimary ninsurer. n- nAnswer- nAssumes nloss nexposures nfrom na nprimary ninsurer.
Autonomous nVehicle nApplications n(AVA) nis na nstart-up ncompany nthat ndevelops nsafety ntechnologies nthat
ncan nbe nsold nto ncompanies nthat nare nproducing nautonomous nvehicles. nOne ntechnology nAVA nis
ndeveloping
friend Mehmet tells her not to skimp on insurance, because it will help manage her cash flows. Which one
of the following examples best illustrates Mehmet's point?
A. Ciara needs her car to get to her job, and she needs her job to make car payments and pay for her car
insurance.
B. When her car's windshield breaks, Ciara has to pay only $100 of the $600 cost of replacing it.
C. When her car's transmission goes out a month after the warranty expires, Ciara is faced with a $1,100
repair bill.
D. Ciara finds it difficult to come up with a $787 auto insurance premium every six months. - Answer-
When her car's windshield breaks, Ciara has to pay only $100 of the $600 cost of replacing it.
Which one of the following statements is correct regarding the benefits provided by insurance?
A. Insurance reduces the financial consequences of loss exposures but not the related uncertainty.
B. The primary role of insurance is to meet mandatory insurance requirements.
C. The reduction in losses paid by insurers due to risk control measures benefits individual insureds but
not society as a whole.
D. Insurance helps reduce the financial burden to society by compensating accident victims. - Answer-
Insurance helps reduce the financial burden to society by compensating accident victims.
Shelton Industries experienced a fire in its manufacturing plant. Several employees suffered burns and
,smoke inhalation injuries as they tried to escape the building. Which one of Shelton Industries'
commercial property-casualty policies would pay for the employees' injuries and illnesses? - Answer-
Workers compensation insurance
A homeowners policy is a type of - Answer- Personal property-casualty insurance policy.
Which one of the following correctly describes a reason for government involvement in property-casualty
insurance?
,A. Selling insurance provides the government with a non-tax source of revenues and profits.
B. Government programs can meet legitimate public demands unmet by private insurers.
C. Competition from government plans keeps private insurer's premiums competitive.
D. Preventing high-risk individuals or activities from being insured is in the public interest. - Answer-
Government programs can meet legitimate public demands unmet by private insurers.
Insurance Company wrote a commercial liability policy for a manufacturer of off-road motorcycles. The
potential costs of the insured's loss exposure exceed Insurance Company's capacity. Insurance Company
could consider which one of the following types of contractual transferring agreement to meet its needs? -
Answer- Reinsurance
In an effort to reduce expenses, increase profitability, and reduce human errors; ABC Insurance Company
decided to automate most of its personal lines underwriting function. The company now uses standardized
application forms that are submitted electronically to one of the company's regional offices. At each
regional office, a computer with a scanner reads the applications. The computer has been programmed
with acceptable answers to the questions. If the answers on the application are all acceptable, the policy is
automatically issued. Rejected applications are automatically forwarded to a human underwriter who
reviews them. The use of this technology has reduced the company's expense ratio by two and a half
percent, and reduced the time it takes to issue a policy. ABC Insurance Company's use of computers to
evaluate applications electronically is an application of
A. Radiant sensors.
B. Artificial intelligence.
C. - Answer- Artificial intelligence.
Jimmy decided to buy a house in his neighborhood that had been foreclosed on by the bank that held the
mortgage. He is hoping to do some renovation and repair work on the house, and then sell it for a quick
profit. What type of risk is this? - Answer- Speculative Risk
Which one of the following best describes the concept of pooling?
A. The financial consequences of unanticipated losses are transferred to an insurer.
B. Risk management is concerned with positive and negative risks.
C. Insureds share the cost of each other's losses.
D. Insurance benefits society as a whole. - Answer- Insureds share the cost of each other's losses.
, Which none nof nthe nfollowing nrepresents nuncertainty nabout noutcomes nthat ncan nbe nnegative nor npositive?
A. Loss nexposure
B. Transfer
C. Risk
D. Pooling n- nAnswer- nRisk
Coverage nfor nmoney nand nother nbusiness nproperty nfrom nvarious ncauses nof nloss nsuch nas nburglary, nrobbery,
ntheft, nand nemployee ndishonesty ntypically nis nprovided nby n- nAnswer- nCommercial ncrime ninsurance.
The ninsurance nagent nsuggested nthat nSally's nSnack nShop nbuy na npolicy nthat ncombines nproperty, ncrime, nand
nliability ncoverages ninto none npolicy. nThis nis nreferred nto nas na(n) n- nAnswer- nCommercial nPackage nPolicy
n(CCP)
Which none nof nthe nfollowing ndescribes nthe ncharacteristics nof na nmutual ninsurance ncompany?
A. A ncorporation nowned nby npolicyholders nthat nprovides ninsurance nto nits npolicyholders.
B. An nunincorporated nassociation nthat nprovides nreciprocal ncoverage nto nsubscribers.
C. An nunincorporated nassociation nthat nearns nprofits nfor nits nindividual ninvestors.
D. A ncorporation nowned nby nstockholders nthat nearns nprofits nfor nthe nstockholders. n- nAnswer- nA
ncorporation nowned nby npolicyholders nthat nprovides ninsurance nto nits npolicyholders.
A nreinsurance ncompany
A. Assumes nloss nexposures nfrom na nprimary ninsurer.
B. Provides nprimary ninsurance nfor nloss nexposures nthat nprivate ninsurers nare nunwilling nto nprovide.
C. Is nformed nto nwrite nall nor npart nof nthe ninsurance nfor na nparent ncompany.
D. Transfers nlosses nto na nprimary ninsurer. n- nAnswer- nAssumes nloss nexposures nfrom na nprimary ninsurer.
Autonomous nVehicle nApplications n(AVA) nis na nstart-up ncompany nthat ndevelops nsafety ntechnologies nthat
ncan nbe nsold nto ncompanies nthat nare nproducing nautonomous nvehicles. nOne ntechnology nAVA nis
ndeveloping
