An insurance policy specifically written and designed to meet the needs of an insurance purchaser is called a(n) A) manuscript policy. B) bureau policy. C) standard policy. D) excess policy. ANSWER Answer: A
Date: September 19th, 2020
Factors a risk manager must consider in selecting an insurer include which of the following? I. The availability of risk management services II. The financial strength of the insurer A) I only B) II only C) both I and II D) neither I nor II ANSWER Answer: C
Date: September 19th, 2020
Which of the following statements about an excess insurance plan is true? A) The insurer does not participate in a loss until the loss exceeds the amount the firm has decided to retain. B) The insurer pays first up to some specified level; the insured then pays all losses exceeding the insurer’s retention level. C) […]
Date: September 19th, 2020
ABC Insurance retains the first $1 million of each property damage loss and purchases reinsurance for that part of any property loss that exceeds $1 million. The insurance for property losses above $1 million is called A) excess insurance. B) liability insurance. C) coinsurance. D) primary insurance. ANSWER Answer: A
Date: September 19th, 2020
Which of the following statements about the use of deductibles is (are) true? I. They represent risk retention by insurance purchasers. II. They tend to increase the cost of adjusting small claims. A) I only B) II only C) both I and II D) neither I nor II ANSWER Answer: A
Date: September 19th, 2020
All of the following are disadvantages of using insurance in a commercial risk management program EXCEPT A) There is an opportunity cost because premiums must be paid in advance. B) Considerable time and effort must be spent selecting and negotiating coverages. C) It results in considerable fluctuations in earnings after losses occur. D) Attitudes toward […]
Date: September 19th, 2020
Which of the following types of loss exposures may be appropriately handled through the purchase of insurance?I. High-frequency, low-severity loss exposures II. Low-frequency, high-severity loss exposures A) I only B) II only C) both I and II D) neither I nor II ANSWER Answer: B
Date: September 19th, 2020
Which of the following types of loss exposures are best handled by the use of avoidance? A) low-frequency, low-severity loss exposures B) low-frequency, high-severity loss exposures C) high-frequency, low-severity loss exposures D) high-frequency, high-severity loss exposures ANSWER Answer: D
Date: September 19th, 2020
Low-frequency, low-severity loss exposures are best handled by A) avoidance. B) retention. C) insurance. D) noninsurance transfer. ANSWER Answer: B
Date: September 19th, 2020
Cal was just hired as XYZ Company’s first risk manager. Cal would like to employ the risk management process. The first step in the process Cal should follow is to A) evaluate potential losses faced by XYZ Company. B) formulate a treatment plan for XYZ Company’s loss exposures. C) identify potential losses faced by XYZ […]
Date: September 19th, 2020
