CAIB 1 - GENERAL QUESTIONS:
CHAPTER 1 EXAM GRADED A+
List nthe n3 ncategories nof nrisk ngenerally nfaced nby npeople. n- ncorrect nanswers n-
1) nPersonal nRisk
2) nProperty nRisk
3) nLiability nRisk
State n4 npossible noptions npeople ncan nchoose nto ndeal nwith nrisk. n(explain neach
nand nexample) n- ncorrect nanswers n-1) nRisk nAvoidance n- n"not ndoing nsomething"
nin nsuch ncause nthere nis nkot nchance nof nloss. nex: nRenting nvs. nowning nproperty
2)Risk nControl n- ntaking nmeasures nto nreduce nthe nfrequency nand nseverity nof
nlosses. nex: nfire ndetection nalarms n
3) nRisk nRetention n- nbigger ncompanies ncan noften nassume nfinancial
nresponsibility nfor ntheir nown nlosses. nNot nmany npeople ncan nafford nto ndo nthis
nand nmay nopt nto nonly nself ninsure na nportion nof ntheir npolicy. nex: ninsuring nfor
nall nproperty nlosses, nexcluding nglass nbreakage n
, 4) nRisk nTransfer n- npeople nunable nto nwithstand na nfinancial nloss nlook nto
ntransfer nall nor na nportion nof nthis nrisk. nex: nInsurance n(most npractical nmeans nof
ndealing nwith nrisk)
Give n2 nexamples nof nloss ncontrol nmeasures nthat ncan nbe ntaken nto nreduce nthe
nfrequency nand nseverity nof nlosses. n- ncorrect nanswers n-1) nInstalling nintrusion
ndetection nequipment n
2) nFire ndetection nalarms
State n2 nreasons nwhy nloss ncontrol nmeasures nare nnot na ntotal nsolution nin
neliminating nfinancial nloss. n- ncorrect nanswers n-1) nEquipment nwill nnot nwork
n100% nof nthe ntime
2) nCertain ntypes nof nlosses nsuch nas nwind, nhail nand nlightning ncannot nbe
neffectively ncontrolled
Which nof nthe nfour npossible noptions nis ngenerally nnot nan neffective nmeans nof
ndealing nwith nrisk? n- ncorrect nanswers n-Risk nAvoidance
Which nof nthe nfour npossible noptions nis nthe nmost npopular nand npractical nmeans
nof ndealing nwith nrisk? n- ncorrect nanswers n-Transfer nof nRisk
Explain nusing nan nexample, n"speculative nrisk" n- ncorrect nanswers n-Placing na
nbet nat na nblackjack ntable nin nLas nVegas, nthere nis na nchance nof nfinancial nloss
nbut nalso na nchance nof nfinancial ngain.
Explain nusing nan nexample, n"pure nrisk" n- ncorrect nanswers n-Owning nand
noperating nan nautomobile, nthere nis nno nchance nin nfinancial ngain nonly nfinancial
nloss nif nthere nwere nto nbe na nloss nor ndamage.
Which ntypes nof nthese nrisks nwill ninsurers nnot nprovide nan ninsurance npolicy nfor?
n- ncorrect nanswers n-Speculative nRisks
All ncontracts ncontain n5 nelements. nIdentify nand nexplain nthese nelements n-
ncorrect nanswers n-1) nAgreement n- na nmeeting nof nthe nminds. nAn noffer nwas
nmade nand nan nunequivocal nand nunconditional nacceptance nof nthe nterms nof
nthat noffer n(not nnecessary nto nbe nin nwriting) n
2) nConsideration n- nis nan nexchange nof nsomething nof nvalue nbetween nthe
nparties n
3) nLegality nof nobject n- na ncontract nintended nfor na npurpose nwhich nis ncontrary
nto npublic npolicy nis nnot nenforceable nby nlaw.
4) nLegal nCapacity nof nthe nParties nto nContract n- nthe nlaw nwill nenforce nonly
nthose ncontracts nof npersons nit nrecognizes nas ncompetent nor nhaving nthe nlegal
ncapacity nto ncontract n
CHAPTER 1 EXAM GRADED A+
List nthe n3 ncategories nof nrisk ngenerally nfaced nby npeople. n- ncorrect nanswers n-
1) nPersonal nRisk
2) nProperty nRisk
3) nLiability nRisk
State n4 npossible noptions npeople ncan nchoose nto ndeal nwith nrisk. n(explain neach
nand nexample) n- ncorrect nanswers n-1) nRisk nAvoidance n- n"not ndoing nsomething"
nin nsuch ncause nthere nis nkot nchance nof nloss. nex: nRenting nvs. nowning nproperty
2)Risk nControl n- ntaking nmeasures nto nreduce nthe nfrequency nand nseverity nof
nlosses. nex: nfire ndetection nalarms n
3) nRisk nRetention n- nbigger ncompanies ncan noften nassume nfinancial
nresponsibility nfor ntheir nown nlosses. nNot nmany npeople ncan nafford nto ndo nthis
nand nmay nopt nto nonly nself ninsure na nportion nof ntheir npolicy. nex: ninsuring nfor
nall nproperty nlosses, nexcluding nglass nbreakage n
, 4) nRisk nTransfer n- npeople nunable nto nwithstand na nfinancial nloss nlook nto
ntransfer nall nor na nportion nof nthis nrisk. nex: nInsurance n(most npractical nmeans nof
ndealing nwith nrisk)
Give n2 nexamples nof nloss ncontrol nmeasures nthat ncan nbe ntaken nto nreduce nthe
nfrequency nand nseverity nof nlosses. n- ncorrect nanswers n-1) nInstalling nintrusion
ndetection nequipment n
2) nFire ndetection nalarms
State n2 nreasons nwhy nloss ncontrol nmeasures nare nnot na ntotal nsolution nin
neliminating nfinancial nloss. n- ncorrect nanswers n-1) nEquipment nwill nnot nwork
n100% nof nthe ntime
2) nCertain ntypes nof nlosses nsuch nas nwind, nhail nand nlightning ncannot nbe
neffectively ncontrolled
Which nof nthe nfour npossible noptions nis ngenerally nnot nan neffective nmeans nof
ndealing nwith nrisk? n- ncorrect nanswers n-Risk nAvoidance
Which nof nthe nfour npossible noptions nis nthe nmost npopular nand npractical nmeans
nof ndealing nwith nrisk? n- ncorrect nanswers n-Transfer nof nRisk
Explain nusing nan nexample, n"speculative nrisk" n- ncorrect nanswers n-Placing na
nbet nat na nblackjack ntable nin nLas nVegas, nthere nis na nchance nof nfinancial nloss
nbut nalso na nchance nof nfinancial ngain.
Explain nusing nan nexample, n"pure nrisk" n- ncorrect nanswers n-Owning nand
noperating nan nautomobile, nthere nis nno nchance nin nfinancial ngain nonly nfinancial
nloss nif nthere nwere nto nbe na nloss nor ndamage.
Which ntypes nof nthese nrisks nwill ninsurers nnot nprovide nan ninsurance npolicy nfor?
n- ncorrect nanswers n-Speculative nRisks
All ncontracts ncontain n5 nelements. nIdentify nand nexplain nthese nelements n-
ncorrect nanswers n-1) nAgreement n- na nmeeting nof nthe nminds. nAn noffer nwas
nmade nand nan nunequivocal nand nunconditional nacceptance nof nthe nterms nof
nthat noffer n(not nnecessary nto nbe nin nwriting) n
2) nConsideration n- nis nan nexchange nof nsomething nof nvalue nbetween nthe
nparties n
3) nLegality nof nobject n- na ncontract nintended nfor na npurpose nwhich nis ncontrary
nto npublic npolicy nis nnot nenforceable nby nlaw.
4) nLegal nCapacity nof nthe nParties nto nContract n- nthe nlaw nwill nenforce nonly
nthose ncontracts nof npersons nit nrecognizes nas ncompetent nor nhaving nthe nlegal
ncapacity nto ncontract n
