Which of the following is considered to be an event or condition that increases the probability of an insured’s loss?
Key Terms
Which of the following is considered to be an event or condition that increases the probability of an insured’s loss?
Hazard
~ Hazards are events or conditions that increase the likelihood of an insured’s ...
People with higher loss exposure have the tendency to purchase insurance more often than those at average risk. This is called
Adverse selection
~ Is the tendency of persons with higher loss exposure to purchase in...
Insurance companies determine risk exposure by which of the following?
Law of large numbers and risk pooling
~ All forms of insurance determine exposure throu...
What is known as the immediate specific even causing loss and giving rise to risk?
Peril
~ A peril is defined as the immediate specific event causing loss and giving rise to risk. A peril is the cause...
Insurance represents the process of risk
Transference
~ Insurance involves the transfer of risk
All of the following are examples of pure risk EXCEPT
<> Injured while playing football
<> Falling at a casino and breaking a hip
<> Losing money at a casino
<> Jewelry stolen during a home remedy
<><> Losing money at a casino
~ Pure risk is a category of risk in which loss is the only possible outcom...
Related Flashcard Decks
| Term | Definition |
|---|---|
Which of the following is considered to be an event or condition that increases the probability of an insured’s loss? | Hazard ~ Hazards are events or conditions that increase the likelihood of an insured’s loss |
People with higher loss exposure have the tendency to purchase insurance more often than those at average risk. This is called | Adverse selection ~ Is the tendency of persons with higher loss exposure to purchase insurance more often that those at average risk |
Insurance companies determine risk exposure by which of the following? | Law of large numbers and risk pooling ~ All forms of insurance determine exposure through risk pooling and the law of large numbers |
What is known as the immediate specific even causing loss and giving rise to risk? | Peril |
Insurance represents the process of risk | Transference ~ Insurance involves the transfer of risk |
All of the following are examples of pure risk EXCEPT | <><> Losing money at a casino |
How do insurers predict the increase of individuals risks? | Law of large numbers ~ TLoLN helps insurance companies predict the increase of individual risks. |
An individual who removes the risk of losing money in the stock market by never purchasing stocks is said to be engaging in | Risk avoidance |
An example of risk sharing would be | Doctors pooling their money to cover malpractice exposures |
The cause of a loss is referred to as a(n) | Peril |