Chapter One: Perils and Hazards

All of the following are examples of morale hazards EXCEPT:

An insured who intentionally slips and falls on the floor in order to receive disability income benefits A person who takes fewer precautions and preventive measures to remain in good health because 'the health insurance policy will cover the medical bills,_ is committing a morale hazard. An insured who attempts to defraud the insured by feigning an illness or causing self-inflicted bodily injury is committing a moral hazard.

Matthew is a janitor for the local high school. He washes the hallway floors every night during the winter to make sure the slush, snow and salt from outside don't pose a hazard to students. One night, Matthew unintentionally forgets to wash the hallway that connects the science wing to the main lobby. The next morning, three students walk in through the school's lobby, slip on a puddle of water, fall and are injured. What type of hazard is shown in this example?

Physical Wet and slippery floors are an example of physical hazards. A moral hazard is not demonstrated because Matthew is not a corrupt or cruel janitor _ he didn't intentionally forget to clean up the floors in hopes that students would hurt themselves, nor is a morale hazard demonstrated because Matthew diligently cleans the floors every night as a proactive measure against students slipping on wet floors. Matthew unintentionally forgot to clean the floor.

Which of the following terms best describes something that increases the chance of a loss occurring from a particular peril?

Hazard A hazard is distinguished from exposure as being something that elevates the chance of a loss occurring.

All of the following are legal hazards EXCEPT:

Improperly stored toxic waste Legal court rulings which increase the chance or amount of loss. A physical hazard is defined as physical characteristics which raise the loss potential for a particular peril. Some examples of physical hazards include: poorly constructed roofs, uneven sidewalks, icy roads and improperly stored toxic waste.

An insurable risk is characterized by all of the following EXCEPT:

Loss must be catastrophic Insurable risks cannot be so severe that the insurance company cannot afford to pay the claim.

A moral hazard can be described by all of the following statements EXCEPT:

An insured's careless attitude or lack of responsibility An insured's careless attitude or lack of responsibility describe a morale hazard.

All of the following are elements of insurable risks EXCEPT:

Exposure must not be chosen randomly For insurable risks, the following must be true: 1.) loss must be definite and measurable; 2.) the loss must be predictable; 3.) loss exposures must be chosen randomly; and 4.) loss must not be catastrophic.

Which of the following is not a type of hazard?

Perilous hazard Perilous is not a recognized type of hazard.

Which of the following best explains why death protection may be covered by an insurance policy, even though all people eventually die?

Loss must occur by chance or accident. Premature death is a feasible risk to insure because life insurance protects against the uncertainty of when a person will die, not whether or not a person will die (death is a known eventuality). It is by chance or accident that a person's death arrives too soon, such as death in while traveling as a fare-paying passenger in an airplane, an unexpected car accident, or sudden death without medical explanation. Premature death can adversely affect the insured's dependents, especially if the insured's family depends on the insured's income earnings.

A hazard is best defined as:

Something that increases the chance of loss Hazard is anything (a condition) that increases the chance of a loss occurrence.