Chapter 1 - Fundamentals of Insurance QUESTIONS AND ANSWERS RATED A+ 2023|2024 UPDATE

Chapter 1 - Fundamentals of Insurance QUESTIONS AND ANSWERS RATED A+ 2023|2024 UPDATE Spread of Risk - correct answer - "The losses of few are shared among the many" - A large pot into which all insureds place their premiums - This pot provides for payment for the losses of those who have claims Basis of Credit System - correct answer Consumer access to insurance frees up credit Eliminates Worry - Encourages Entrepreneurship - correct answer - Allows people to engage in many ventures w/o having to set money aside (for future losses) - Premium (defined expenditure) - Covers large but uncertain losses - making you _________. Loss Prevention and Loss Reduction - correct answer - Nation-wide campaign to fight Insurance Fraud - Industry works hard to prevent and reduce severity Source of Employment and Investment Capital - correct answer - Insurers are major employers and investors - Insurers employ or contract services from more than 100,000 people, including: independent brokers, adjusters, and actuaries. - Car repair, construction, medicine, law, and accounting derive income from the settlement of insurance claims. - Claims total billions annually. Definition of Insurance - correct answer - "The undertaking by one person to indemnify another person against loss or liability for loss in respect of certain risk or peril to which the object of insurance may be exposed ... or to pay a sum of money or other thing of value upon the happening of a certain event." Insurance ... - correct answer - Provides a means of shifting ones financial responsibility for a loss to another party. Payment will be made only in the ... - correct answer - Event of the happening of a certain risk or peril. Risk - correct answer - "The chance of financial loss to which the object of insurance may be exposed." Insurance is purchased to .. - correct answer - Cover the chances of financial loss Risk has also come to mean the ... - correct answer - "The object of insuran