Business

What is the difference between avoiding risk and reducing risk? What

QUESTION What is the difference between avoiding risk and reducing risk? What will be an ideal response?   ANSWER Answer: Risk avoidance is the practice of avoiding risk by not participating in risky activity. Risk reduction is the practice of reducing risk by removing hazards or taking preventive measures. Explanation: Two additional ways that businesses […]

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Date: September 3rd, 2020

What are self-insurance and risk transfer? What will be an ideal resp

QUESTION What are self-insurance and risk transfer? What will be an ideal response?   ANSWER Answer: Self-insurance is the practice in which a company sets aside money to cover losses with its own funds. Risk transfer is the practice whereby a company transfers its risk to an insurance company in return for a fee. Explanation: […]

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Date: September 3rd, 2020

What is the difference between stock insurance companies and mutual in

QUESTION What is the difference between stock insurance companies and mutual insurance companies? What will be an ideal response?   ANSWER Answer: Stock insurance companies are private insurers providing insurance to policyholders and earning profits for shareholders. Mutual insurance companies are nonprofit private insurers owned by their insurance policyholders, to whom they pay dividends or […]

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Date: September 3rd, 2020

Differentiate among three types of liability insurance. What will be

QUESTION Differentiate among three types of liability insurance. What will be an ideal response?   ANSWER Answer: (1) Public liability insurance protects the business against business risks associated with the company’s property or employees. (2) Product liability insurance protects the business when someone claims its product caused damage, injury, or death. (3) Professional liability insurance […]

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Date: September 3rd, 2020

What are the three options for insurance for home-based businesses? W

QUESTION What are the three options for insurance for home-based businesses? What will be an ideal response?   ANSWER Answer: (1) Add a rider or endorsement to your renter’s or homeowner’s insurance policy. (2) Get a home office policy (HOP), a combination of a homeowner’s policy and a business insurance that eliminates duplicate coverage or […]

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Date: September 3rd, 2020

What is reinsurance? What will be an ideal response?

QUESTION What is reinsurance? What will be an ideal response?   ANSWER Answer: Reinsurance is when a general insurer shares the risks and premiums associated with a specific policy with another company, the reinsurer. Explanation: Insurers can’t survive unless they spread their risks over many policyholders.

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Date: September 3rd, 2020

Which of the following is NOT a benefit provided by workers’ compensat

QUESTION Which of the following is NOT a benefit provided by workers’ compensation insurance? A) medical care B) benefits to survivors of workers who die of work-related injuries C) rehabilitation services D) financial benefits E) unemployment benefits   ANSWER Answer: E Explanation: E) Workers’ compensation insurance provides financial benefits as well as coverage of medical […]

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Date: September 3rd, 2020

Does health insurance involve pure risk or speculative risk for the in

QUESTION Does health insurance involve pure risk or speculative risk for the insured? Explain. What will be an ideal response?   ANSWER Answer: Health insurance involves pure risk for the insured. Pure risk involves a chance for either loss or no loss; there is no possibility of gain. The insured pay their premiums whether they […]

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Date: September 3rd, 2020

Which of the following is an example of transaction offered by a stock

QUESTION Which of the following is an example of transaction offered by a stock insurance company? A) Anita got a dividend check in the mail from her auto insurance company. B) Albert was assessed a fee by his homeowner’s policy because the insurance company suffered losses this year. C) Hal’s insurance company did so well […]

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Date: September 3rd, 2020