Question 1

The risk of environmental harm is ________ in its proportions on issues such as global warming.

Accepted Answer

A)   local
B)   regional
C)   national
D)   internationalE) B) and C)
F) All of the above

Question 2

Outsourcing helps some companies avoid risk.

Accepted Answer

A) True 
 B)False

Question 3

Self-insurance is the practice of setting aside money to cover routine claims and buying only "catastrophe" policies to cover big losses.

Accepted Answer

A) True 
 B)False

Question 4

________ risk involves the threat of loss with no chance for profit.

Accepted Answer

A)   Minimum
B)   Pure
C)   Speculative
D)   ManagedE) A) and C)
F) None of the above

Question 5

Disability insurance replaces part of your income if you become disabled and can no longer work, but you usually must be disabled for a specified period of time before benefits are provided.

Accepted Answer

A) True 
 B)False

Question 6

According to the rule of indemnity, an insured person cannot collect more than the actual loss from an insurable risk.

Accepted Answer

A) True 
 B)False

Question 7

Risk management now includes the evaluation of

Accepted Answer

A)   worldwide risks such as global warming.
B)   worldwide issues such as poverty.
C)   European issues such as the value of the euro.
D)   political risks in South America.E) All of the above
F) A) and D)

Question 8

An endorsement can provide additional coverage to a homeowner's policy for business equipment.

Accepted Answer

A) True 
 B)False

Question 9

Citrus City Groves on Florida's Gulf Coast, harvests an assortment of citrus fruits. The owners of Citrus City are right to think about how the risk of climate change might impact their crops in the future.

Accepted Answer

A) True 
 B)False

Question 10

Federal Housing Administration (FHA) insurance provides insurance to property owners in high-crime areas.

Accepted Answer

A) True 
 B)False

Question 11

One of Waata's staff members has been out on sick leave because she had an emergency appendectomy. She brought the hospital bills in to Waata for his opinion. It seems she had been covered by two health insurance policies for some time and now she thinks she may be able to collect from both companies in payment for the operation. Waata assured his employee that

Accepted Answer

A)   she could look forward to a check from both companies once they had paid the medical bills.
B)   because of the rule of indemnity she would not be able to profit from her operation.
C)   because of the law of large numbers both insurance companies would pay her directly.
D)   because her risk was insurable, she would be able to collect from both insurance policies.E) A) and B)
F) A) and C)

Question 12

Any risk is insurable as long as you can pay the premium.

Accepted Answer

A) True 
 B)False

Question 13

Which type of risk management strategy is a company using when it installs mirrors and surveillance cameras to spot and prevent shoplifting?

Accepted Answer

A)   avoiding the risk
B)   insuring against the risk
C)   assuming the risk
D)   reducing the riskE) A) and D)
F) All of the above

Question 14

A policyholder must have a(n)  ________ in what is being insured, meaning that the policyholder must be the one at risk to suffer an economic loss.

Accepted Answer

A)   speculative interest
B)   uncertain stake
C)   unsecured holding
D)   insurable interestE) None of the above
F) All of the above

Question 15

One way to lower the need for outside insurance is to self-insure.

Accepted Answer

A) True 
 B)False

Question 16

Home-based business owners add a ________ to their homeowner's insurance policy to ensure that they have adequate coverage.

Accepted Answer

A)   deductible unit
B)   compensation clause
C)   rider
D)   tagE) A) and C)
F) A) and B)

Question 17

All risks are insurable.

Accepted Answer

A) True 
 B)False

Question 18

An insurance company can use the law of large numbers to predict the number of people in your community that will have a car accident in a given month.

Accepted Answer

A) True 
 B)False

Question 19

Risk management for business is critical due in part to

Accepted Answer

A)   natural disasters.
B)   profitability.
C)   legal requirements.
D)   international requirements.E) B) and D)
F) A) and D)

Question 20

Which of the following statements best reflects the concept behind the rule of indemnity?

Accepted Answer

A)   If a large number of people are exposed to the same risk, a predictable number of losses will occur during a given period of time.
B)   If a written contract exists between the insured and an insurance company, the insured is entitled to receive the maximum amount stated in the contract in the event of a loss.
C)   If an insurance company's premiums generate excess funds, these excess funds must be returned to the policyholders in the form of dividends or reductions in future premiums.
D)   An insured person cannot collect more than the actual loss from an insurable risk.E) All of the above
F) C) and D)

Exam 23: Appendix: Managing Risk

Federal Housing Administration (FHA) insurance provides insurance to property owners in high-crime areas.

Correct Answer
verified

A policyholder must have a(n) ________ in what is being insured, meaning that the policyholder must be the one at risk to suffer an economic loss.

Correct Answer
verified

All risks are insurable.

Correct Answer
verified

Risk management now includes the evaluation of

Correct Answer
verified

Any risk is insurable as long as you can pay the premium.

Correct Answer
verified

Correct Answer
verified

Home-based business owners add a ________ to their homeowner's insurance policy to ensure that they have adequate coverage.

Correct Answer
verified

An endorsement can provide additional coverage to a homeowner's policy for business equipment.

Correct Answer
verified

An insurance company can use the law of large numbers to predict the number of people in your community that will have a car accident in a given month.

Correct Answer
verified

Which of the following statements best reflects the concept behind the rule of indemnity?

Correct Answer
verified

Disability insurance replaces part of your income if you become disabled and can no longer work, but you usually must be disabled for a specified period of time before benefits are provided.

Correct Answer
verified

Risk management for business is critical due in part to

Correct Answer
verified

________ risk involves the threat of loss with no chance for profit.

Correct Answer
verified

The risk of environmental harm is ________ in its proportions on issues such as global warming.

Correct Answer
verified

Outsourcing helps some companies avoid risk.

Correct Answer
verified

Citrus City Groves on Florida's Gulf Coast, harvests an assortment of citrus fruits. The owners of Citrus City are right to think about how the risk of climate change might impact their crops in the future.

Correct Answer
verified

One way to lower the need for outside insurance is to self-insure.

Correct Answer
verified

According to the rule of indemnity, an insured person cannot collect more than the actual loss from an insurable risk.

Correct Answer
verified

Which type of risk management strategy is a company using when it installs mirrors and surveillance cameras to spot and prevent shoplifting?

Correct Answer
verified

Self-insurance is the practice of setting aside money to cover routine claims and buying only "catastrophe" policies to cover big losses.

Correct Answer
verified

Exam 23: Appendix: Managing Risk

Federal Housing Administration (FHA) insurance provides insurance to property owners in high-crime areas.

Correct AnswerverifiedShow Answer

A policyholder must have a(n) ________ in what is being insured, meaning that the policyholder must be the one at risk to suffer an economic loss.

Correct AnswerverifiedShow Answer

All risks are insurable.

Correct AnswerverifiedShow Answer

Risk management now includes the evaluation of

Correct AnswerverifiedShow Answer

Any risk is insurable as long as you can pay the premium.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Home-based business owners add a ________ to their homeowner's insurance policy to ensure that they have adequate coverage.

Correct AnswerverifiedShow Answer

An endorsement can provide additional coverage to a homeowner's policy for business equipment.

Correct AnswerverifiedShow Answer

An insurance company can use the law of large numbers to predict the number of people in your community that will have a car accident in a given month.

Correct AnswerverifiedShow Answer

Which of the following statements best reflects the concept behind the rule of indemnity?

Correct AnswerverifiedShow Answer

Disability insurance replaces part of your income if you become disabled and can no longer work, but you usually must be disabled for a specified period of time before benefits are provided.

Correct AnswerverifiedShow Answer

Risk management for business is critical due in part to

Correct AnswerverifiedShow Answer

________ risk involves the threat of loss with no chance for profit.

Correct AnswerverifiedShow Answer

The risk of environmental harm is ________ in its proportions on issues such as global warming.

Correct AnswerverifiedShow Answer

Outsourcing helps some companies avoid risk.

Correct AnswerverifiedShow Answer

Citrus City Groves on Florida's Gulf Coast, harvests an assortment of citrus fruits. The owners of Citrus City are right to think about how the risk of climate change might impact their crops in the future.

Correct AnswerverifiedShow Answer

One way to lower the need for outside insurance is to self-insure.

Correct AnswerverifiedShow Answer

According to the rule of indemnity, an insured person cannot collect more than the actual loss from an insurable risk.

Correct AnswerverifiedShow Answer

Which type of risk management strategy is a company using when it installs mirrors and surveillance cameras to spot and prevent shoplifting?

Correct AnswerverifiedShow Answer

Self-insurance is the practice of setting aside money to cover routine claims and buying only "catastrophe" policies to cover big losses.

Correct AnswerverifiedShow Answer

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