RMIN 4000 Test 1 Brown UGA Exam
Questions and Answers Graded A+
Exposures - Correct answer-things of value (assets) that could be lost
Perils - Correct answer-things that cause injury or loss
risk - Correct answer-a calculated possibility of a negative outcome
Frequency - Correct answer-the number of losses (such as fire or theft) that occur
within a specified time period. aka the probability of a loss
Severity - Correct answer-the dollar amount of a loss for a specific peril (fire, theft,
collision) aka How much does it cost when the loss does occur?
Hazard - Correct answer-a condition that creates or increases the frequency or
severity of loss but does NOT cause the loss.
Physical Hazard - Correct answer-a physical condition that increases the frequency
or severity of loss
Moral Hazard - Correct answer-the presence of insurance changes the behavior of
the insured. ex: making hail damage to get a check
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, Morale hazard (attitudinal hazard) - Correct answer-A condition of carelessness or
indifference that increases the frequency or severity of loss.
Legal Hazard - Correct answer-characteristics of the legal system or regulatory
environment that increase the frequency or severity of losses
Georgia's Diminution in value is an example of a - Correct answer-legal hazard
because it increases the severity on property losses
Pure Risk - Correct answer-A chance of loss or no loss, but no chance of gain.
Insurance can be bought for this
Speculative Risk - Correct answer-A chance of loss, no loss, or gain.
Diversifiable risk - Correct answer-a risk that affects only individuals or small
groups and not the entire economy. It can be eliminated/ reduced through
diversification. the risks are not correlated
Developing cancer or your house being caught on fire are two examples of what
kind of risk? - Correct answer-Pure Risk
diversifiable risk - Correct answer-A risk that affects only some individuals,
businesses, or small groups. they can be reduced/eliminated through
diversification. the risks are not correlated
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Questions and Answers Graded A+
Exposures - Correct answer-things of value (assets) that could be lost
Perils - Correct answer-things that cause injury or loss
risk - Correct answer-a calculated possibility of a negative outcome
Frequency - Correct answer-the number of losses (such as fire or theft) that occur
within a specified time period. aka the probability of a loss
Severity - Correct answer-the dollar amount of a loss for a specific peril (fire, theft,
collision) aka How much does it cost when the loss does occur?
Hazard - Correct answer-a condition that creates or increases the frequency or
severity of loss but does NOT cause the loss.
Physical Hazard - Correct answer-a physical condition that increases the frequency
or severity of loss
Moral Hazard - Correct answer-the presence of insurance changes the behavior of
the insured. ex: making hail damage to get a check
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
, Morale hazard (attitudinal hazard) - Correct answer-A condition of carelessness or
indifference that increases the frequency or severity of loss.
Legal Hazard - Correct answer-characteristics of the legal system or regulatory
environment that increase the frequency or severity of losses
Georgia's Diminution in value is an example of a - Correct answer-legal hazard
because it increases the severity on property losses
Pure Risk - Correct answer-A chance of loss or no loss, but no chance of gain.
Insurance can be bought for this
Speculative Risk - Correct answer-A chance of loss, no loss, or gain.
Diversifiable risk - Correct answer-a risk that affects only individuals or small
groups and not the entire economy. It can be eliminated/ reduced through
diversification. the risks are not correlated
Developing cancer or your house being caught on fire are two examples of what
kind of risk? - Correct answer-Pure Risk
diversifiable risk - Correct answer-A risk that affects only some individuals,
businesses, or small groups. they can be reduced/eliminated through
diversification. the risks are not correlated
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
