All of the following are burdens to society because of the presence of risk EXCEPT A) The size of an emergency fund must be increased. B) Risk provides an incentive for people to engage in loss control. C) Society is deprived of certain goods and services. D) Mental fear and worry are present. […]
Date: September 19th, 2020
Which of the following statements about liability risks is (are) true? I. Future income and assets can be attached to pay judgments if inadequate insurance is carried. II. There is an upper limit on the amount of loss. A) I only B) II only C) both I and II D) neither I nor II […]
Date: September 19th, 2020
The extra expense incurred by a business to stay in operation following a fire is an example of a(n) A) fundamental risk. B) speculative risk. C) direct loss. D) indirect loss. ANSWER Answer: D
Date: September 19th, 2020
From the insured’s perspective, the use of deductibles in insurance contracts is an example of A) risk transfer. B) risk control. C) risk avoidance. D) risk retention. ANSWER Answer: D
Date: September 19th, 2020
The use of fire-resistive materials when constructing a building is an example of A) risk transfer. B) risk control. C) risk avoidance. D) risk retention. ANSWER Answer: B
Date: September 19th, 2020
Curt borrowed money from a bank to purchase a fishing boat. He purchased property insurance on the boat. Curt had difficulty making loan payments because he did not catch many fish, and fish prices were low. Curt intentionally sunk the boat, collected from his insurer, and paid off the loan balance. This scenario illustrates the […]
Date: September 19th, 2020
Brad started a pest control business. To protect his personal assets against liability arising out of the business, Brad incorporated the business. Brad’s use of the corporate form of organization to shield against personal liability claims illustrates A) fundamental risk. B) noninsurance transfer. C) risk retention. D) objective risk. ANSWER Answer: B
Date: September 19th, 2020
Which of the following statements about speculative risks is true? A) They are almost always insurable by private insurers. B) They are more easily predictable than pure risks. C) They may benefit society even though a loss occurs. D) They involve only a chance of loss. ANSWER Answer: C
Date: September 19th, 2020
Jenna opened a successful restaurant. One night, after the restaurant had closed, a fire started when the electrical system malfunctioned. In addition to the physical damage to the restaurant, Jenna lost profits that could have been earned while the restaurant was closed for repairs. The lost profits are an example of A) direct loss. B) […]
Date: September 19th, 2020
An automobile that is a total loss as a result of a collision is an example of which of the following types of risk? I. Speculative risk II. Diversifiable risk A) I only B) II only C) both I and II D) neither I nor II ANSWER Answer: B
Date: September 19th, 2020
