WebCE Property & Casualty Prep Exam questions with complete solutions

Risk CORRECT ANSWERS: Chance of loss 5 Risk or Loss Factors CORRECT ANSWERS: 1. Risk 2. Loss 3. Exposure 4. Peril 5. Hazard Insurance allows: CORRECT ANSWERS: Individual or group to transfer over to insurance company the risk of financial loss from a destructive event Fundamental purpose of insurance is: CORRECT ANSWERS: To indemnify policyholder against covered losses or restore policyholder back to same financial position they were in before Insurance companies may used term risks to refer to insured: CORRECT ANSWERS: 1. Person 2. Property 3. Activity Loss CORRECT ANSWERS: Unplanned or unwelcome reduction in economic value What is Direct and Indirect loss CORRECT ANSWERS: 1. Direct loss - immediate result of and event caused by a covered peril 2. Indirect loss - remote result of an event caused by covered peril Exposure CORRECT ANSWERS: State of being subject to a possible loss Insurer measures exposure by CORRECT ANSWERS: Units to the person, property or event (more exposure units, the greater the premium) Exposure is also referred to as: CORRECT ANSWERS: Total risk an insurer faces with insured Peril CORRECT ANSWERS: The destructive event that insurance guards against 6 types of peril CORRECT ANSWERS: 1. Fire 2. Explosion 3. Windstorm 4. Flood 5.Theft 6. Collision Insurance policy provides CORRECT ANSWERS: Financial protection against losses caused by specified peril Havard CORRECT ANSWERS: Is condition that increases the likely occurrence of a peril or severity of a loss Name the 3 types of hazards CORRECT ANSWERS: 1. Moral 2. Morale 3. Physical Moral hazard CORRECT ANSWERS: Tendencies or traits of an individual that increases the chance of a loss