Peril & Hazards Q&A

All of the following are legal hazards EXCEPT: a. Suing a person without evidence of damage suffered b. Health insurance policies with mandatory coverage for alcoholism c. Health insurance policies with mandatory maternity coverage d. Improperly stored toxic waste

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: a. Loss is measurable. b. Large number of homogenous exposure units c. Loss must be catastrophic d. Loss must be definite and measurable

Loss must be catastrophic

All of the following are examples of morale hazards EXCEPT: a. An insured who believes that because he has a health insurance policy, he doesn't need to get a flu shot b. An insured who doesn't wash his hands, believing that if he gets sick, his insurance policy will cover the doctor visit and medicine to get better c. An insured that doesn't wear a seat belt and drives above the speed limit, believing that if he gets in a car accident, his insurance policy will cover the cost of any damages to his car, or medical bills d. An insured who intentionally slips and falls on the floor in order to receive disability income benefits

An insured who intentionally slips and falls on the floor in order to receive disability income benefits

A moral hazard can be described by all of the following statements EXCEPT: a. An insured's careless attitude or lack of responsibility b. The predisposition, character, habits and values of a person which increase the chance of a loss occurrence c. An insured who submits a false claim has committed a moral hazard d. An insured who attempts to defraud the insurer in order to make a profit from policy benefits is an example of a moral hazard.

An insured's careless attitude or lack of responsibility

All of the following are elements of insurable risks EXCEPT: a. Loss must occur by chance or accident b. Large number of homogenous units c. Loss must be predictable d. Exposure must not be chosen randomly

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

Hazard

Which of the following is not a type of hazard? a. Physical hazard b. Morale hazard c. Moral hazard d. Perilous hazard

Perilous 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

A hazard is best defined as:

Something that increases the chance of loss

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