Chapter 2: Nature of Insurance, Risk, Perils and Hazards

Which one of these is NOT considered to be an element of an Insurable risk? A. Speculative risk B. Pure risk C. Loss cannot be catastrophic D. Loss must be due to chance

A. Speculative risk

ABC Company is attempting to minimize the severity of potential losses within its company. The company is engaged in A. Transfer B. Retention C. Reduction D. Avoidance

C. Reduction

The "potential for loss" is also known as A. Hazard B. Risk C. Transfer D. Peril

B. Risk

An Insurable risk requires A. The the chance for both a loss or gain exists B. The loss must be catastrophic C. That the chance of loss be measurable D. That the loss must be incalculable

C. That the chance of loss must be measurable

Which of the following can be defined as a cause of a loss? A. Adversity B. Risk C. Hazard D. Peril

D. Peril