Nature of insurance-questions
Pure risk
A situation in which there is only a chance of loss or no loss is a
Increased chance of a loss because of an insured's dishonest tendencies
Moral hazard is described as the
A condition that may increase the likelihood of a loss occurring
A hazard can best be described as
Probability of loss is unknown
All of the following circumstances must be met for loss retention to be an effective risk management technique, except
The greater the number insured, the more accurately the insurer can predict losses and set up appropriate premiums
An insurer having a large number of similar exposure units is consider important because
Principle of Indemnity
Restoring an insured to the same condition as before a loss is known as
Law of large numbers
Which of the following best describes the statement "the more times an event is repeated, the more predictable the outcome becomes"?
Moral hazard
Which of the following describes the increase in the probability of a loss due to an insured's dishonest tendencies?
Speculative risk
Which of the following is a situation where there is a possibility of either a loss or a gain?
Loss exposure
Which of the following is any situation that presents the possibility of a loss?
Loss must be catastrophic
Which of the following is not an element of an insurable risk?
The cause of a loss
Which of the following is not considered definition of risk?
Hazard
Which of the following refers to a condition that may increase the chance of a loss?
Risk is eliminated
Which of the following would not be accomplish with the purchase of an insurance policy?
Pure risks is the only insurable risk
Which of these statements correctly describes risk?