Chapter 12 Study Guide
A business faces risk due to:
An increase in local taxes, poor managements, and a decline in consumer demand.
Human risks:
Are caused by the actions of individuals
Your insurance agent should:
Be someone you trust
Employee Theft:
Can devastate your business financially
An electronic credit authorizer is a machine that:
Checks to see if a credit card is valid
The second step in buying insurance is to:
Determine how much coverage you need
True or False: All risks are insurable.
False
True or False: Although a few employees are hardworking and honest, most will try to take things from your business.
False
True or False: Credit cards are seldom targets of theft.
False
True or False: Electronic devices and security guards are the only steps you can take to prevent or reduce shoplifting.
False
True or False: If you practice risk management you are assuring your business will never face a loss.
False
True or False: It is always a good idea to have extra insurance so every risk is more than covered.
False
True or False: Liability insurance covers fire, robbery, storm damage, and floods.
False
True or False: The most important type of insurance you will need for your business is probably life insurance.
False
True or False: Theft is one of the risks that business owners face, and it is impossible to protect yourself against the different kinds of theft.
False
Which of the following would generally not be considered an uninsurable business risk?
Fire
The location of your business determines whether or not you need:
Flood Insurance
Property insurance usually does not cover losses due to:
Floods
The writer of a bounced check:
Has insufficient funds in the checking account to cover the check
This type of insurance covers your company's legal responsibility for the harm it may cause to others:
Liability
You transfer risk and protect yourself against financial losses from some risks by:
Purchasing insurance
Installing electronic merchandise tags can help to:
Reduce the risk of shoplifting
Looking at all aspects of your business and determining the risks you face is called a:
Risk Assessment
Uninsurable risks are tied to all of the following except:
Robberies
Which type of risk offers you the chance to gain as well as lost from the event or activity?
Speculative
The classifications of risk are based on all of the following except the:
Timing of the risk
To limit losses in the event of a robbery, a business can:
Transfer cash to a safe frequently
True or False: A payment made to an insurance company to cover the cost of insurance is a premium.
True
True or False: A pure risk presents the chance of loss but no opportunity for gain.
True
True or False: A recovery plan is an important part of every risk management plan.
True
True or False: Business interruption insurance covers the loss of income resulting from a fire or other catastrophe that disrupts the operation of the business.
True
True or False: Business owners buy life insurance so that their heirs have enough money to continue the business.
True
True or False: Risk assessment involves looking at all aspects of a business and determining possible risks.
True
True or False: Robbery is one of the risks of being open for business.
True
True or False: The first step in buying insurance is determining how much coverage you need.
True
True or False: To get the best price for insurance, compare policies from different insurance agents.
True
True or False: To minimize losses from bad checks, you can establish a policy of accepting only check drawn on in-state banks.
True
True or False: You should let your managers and employees know about your plan for handling risks.
True