Fundamentals of Insurance - Chapter 1- 2 Practice Questions & Answers 100% Correct!!

Fundamentals of Insurance - Chapter 1- 2 Practice Questions & Answers 100% Correct!!Three Main Categories Of Risk - ANSWER-1) Personal Risk 2)Property Risk 3)Liability Risk What is "Spread of Risk"? - ANSWER-Insurance provides a mechanism in which the losses of few are shared among many Property and Casualty Insurance includes...(3 types of insurance) - ANSWER-1) Automobile Insurance 2) Property Insurance 3) Liability Insurance What are the 4 common options for dealing with risk? - ANSWER-1) Avoidance of Risk 2) Controlling of Risk 3) Retention of Risk 4) Transfer of Risk What is "Avoidance of Risk"? - ANSWER-All chances of financial loss has been eliminated. *Note*- not practical method of dealing with risk What is "Controlling of Risk"? - ANSWER-Loss control measures taken to reduce or mitigrate risk. (eg. Burglar/Fire alarms - not a total solution in eliminating risk but will reduce the potential for loss) What is "Retention of Risk"? - ANSWER-Large corporations and government often assume financial responsibility for their own losses; Self- Insurance. this is generally less expensive than other option available to them. What is "Transfer of Risk"? - ANSWER-When someone is unable to withstand the financial consequences of a potential loss, they may choose to transfer risk to an insurer *Note*- this is the most practical means of dealing with risk What are the TWO types of Risk? - ANSWER-1) Speculative Risk 2) Pure Risk What is "Speculative Risk"? - ANSWE