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