Chapter 1

Insurance is a contract by which one seeks to protect another from A-Loss B-Exposure C-Uncertainty D-Hazards

A-Loss

A person who does not lock the doors or does not repair leaks shows an indifferent attitude. This person present what type of hazard? A-Morale B-Moral C-Legal D-Physical

A-Morale

The risk of loss may be classified as A-Certain risk and Uncertain risk B-Named risk and un-named risk C-High risk and low risk D-Pure risk and speculative risk

D-Pure risk and speculative risk

Which of the following factors is NOT considered by an underwriter when determining the premium rates for an individual seeking insurance? A-Age B-Medical History C-Sex D-Race

D-Race

Events in which a person has both the chance of winning or losing are classified as A-Pure Risk B-Retained Risk C-Speculative Risk D-Insurable

C-Speculative Risk

Event or conditions that increase the chances of an insured loss occurring are referred to as A-Perils B-Hazards C-Exposures D-Risks

B-Hazards

Peril is most easily defined as A-The chance of a loss occurring B-Something that increase the chance of loss C-The cause of loss insured against D-An unhealthy attitude about safety

C-The cause of loss insured against

For the purpose of insurance, risk is defined as A-The cause of loss B-An event that increases the amount of loss C-The uncertainty or chance of loss D-The certainty of loss

C-The uncertainty or chance of loss

What do individuals use to transfer their risk of loss to a larger group? A-Exposure B-Indemnity C-Insurance D-Insurable Interest

C-Insurance

The insurer may suspect that a moral hazard exists if the policyholder A-Is indifferent to activities that may be dangerous B-Always drives over the speed limit C-Is not honest about his health on an application for insurance D-Is prone to depression

C-Is not honest about his health on an application for insurance

Which of the following is the basis for a claim against an insurance policy? A-Hazard B-Misrepresentation C-Loss D-Material Change

C-Loss

The causes of loss insured against in an insurance policy are known as A-Hazards B-Perils C-Losses D-Risks

B-Perils

A situation in which a person can only lose or have no change represents A-Hazard B-Pure risk C-Speculative Risk D-Adverse Selection

B-Pure risk

The reduction, decrease, or disappearance of value of the person or property insured in a policy by a peril insured against is known as A-Risk B-Loss C-Exposure D-Hazard

B-Loss

Insurance is the transfer of A-Risk B-Loss C-Hazard D-Peril

A-Risk

An individual's tendency to be dishonest would be indicative of a A-Physical Hazard B-Moral Hazard C-Morale Hazard D-Pure Hazard

B-Moral Hazard

Which of the following is considered to be a morale hazard? A-Engaging in illegal activities B-Driving recklessly C-Smoking D-Working as a firefighter

B-Driving recklessly

Hazard is best defined as A-Something that increase the risk of loss B-The uncertainty of loss C-Neglect to communicate a material fact D-A deliberate attempt to deceive

A-Something that increase the risk of loss

A tornado that destroys property would be an example of which of the following? A-Physical hazard B-Peril C-Pure Risk D-Loss

B-Peril

Units with the same or similar exposure to loss are referred to as A-Insurable risks B-Law of large numbers C-Homogenous D-Catastrophic loss exposure

C-Homogenous