Utah Insurance Exam Prep Questions and Answers with complete solutions

Risk - Answer-Chance of loss Insurance - Answer-A contract in which one party agrees to indemnify the insured party against loss, damage or liability arising from an unknown event. Pure risk - Answer-Chance of loss only Speculative - Answer-Chance of loss or gain 2 types of risk - Answer-Pure & speculative Only risk insurance covers? - Answer-Pure Exposure - Answer-Unit of measurement. Measures the amount of risk. Hazard - Answer-Condition that INCREASES the chance of loss. Types of hazards - Answer-Physical (can't be controlled) & moral (due to lack of character) & morale (due to carelessness). Which hazards does insurance cover? - Answer-Physical & Morale Peril - Answer-Cause of loss (ex: homeowners- fire, wind, ect.) Loss - Answer-Financial consequence. Reduction or decrease value. Methods of handling risk - Answer-1. Sharing 2. Transfer 3. Avoidance4. Retention 5. Reduction STARR Risk avoidance - Answer-Eliminate risk