1

1 point

Most people have the right amount of insurance coverage and, therefore, are adequately insured.

True

False

2

1 point

Pure risks are those that, when they occur, may only result in a loss or no loss.

True

False

3

1 point

The law of large numbers states that the greater the number of exposures, the closer actual results will approach the probable results expected from an indefinite number of exposures.

True

False

4

1 point

Insurance is a contract of indemnity, which means that a person is entitled to compensation only to the extent that an actual financial loss has been suffered.

True

False

5

1 point

Item 5 is unpinned. Click to pin.

A deductible is a stated amount of money the insured is required to pay on a loss before the insurer will make any payments under the policy conditions.

True

False

6

1 point

Item 6 is unpinned. Click to pin.

Coinsurance defines the percentage of financial responsibility that the insured and the insurer must share under the policy.

True

False

7

1 point

A peril is

the cause of a loss

the probability that a loss will occur

a condition that creates or increases the chance of a loss

a moral hazard

Item at position 8

8

1 point

7. Falsely claiming a theft in order to collect insurance proceeds is an example of a

morale hazard

moral hazard

risk

physical hazard

9

1 point

7. The basic functions of a risk manager include

I. identifying potential losses

II. selecting the appropriate risk management techniques

III. implementing a risk management plan

I only

II only

III only

I, II, and III

10

1 point

All of the following are ways in which individuals or businesses may respond to pure risk exposures EXCEPT

risk transfer

risk reduction

risk withdrawal

risk retention