ALABAMA INSURANCE STATE TEST CH 1-4

Insurance - Answer-is the method for spreading the risk of financial loss among others Casualty Insurance - Answer-mainly protect you against legal liability for BI and/or PD you cause to another Personal Line Insurance - Answer-refer to property and casualty insurance for an individual as opposed to a business Commercial Line Insurance - Answer-refer to property and casualty insurance to cover a business Insurance Underwritting - Answer-is the process of classification, rating, and selection of risk Speculative and Pure - Answer-There are to types of risk Moral Hazard - Answer-results from a decision to do something wrong or to be less conscious of your actions since you know your insurance will pay for it Morale Hazard - Answer-is created when your carless and/or reckless actions or attitudes cause a loss to occur Physical Hazard - Answer-is the physical source that cause or increase the chances of a loss Blanket Coverage - Answer-provides coverage for a different classes of property under 1 policy Sharing Risk - Answer-distributes risk among a particular number of individuals Transfer Risk - Answer-is the most common way but not the only way to transfer risk Avoid Risk - Answer-just do not perform an activity that could carry risk Reduce Risk - Answer-the possibility or severity of a loss can be reduced by using risk control techniques Retain Risk - Answer-is choosing to be financially responsible for all or part of a risk Hold Harmless Agreement - Answer-is an agreement or contract in which one party a