Insurance Introduction Quiz

Question 1 of 20

1. Question

Which of the following is not an insurable risk?

The loss of capital due to the failure of the insured’s business
A loss arising out of damage to a stranger’s property because of an insured’s careless conduct
The loss of business profits while a business is closed for reconstruction after a fire
A and C above.

Question 2 of 20

2. Question

Gambling is a good example of:

Insurable Risk
Speculative Risk
Pure Risk
Personal Risk

Question 3 of 20

3. Question

Risk Is

An insured peril
The uncertainty regarding a loss
Speculative in nature
The same as a hazard

Question 4 of 20

4. Question

Insurers achieve a spread of risk by doing which of the following?

Having customers distributed over many locations
By writing insurance on as few classes of risk as possible
Limited their volume of business to avoid exposure to loss
None of the above

Question 5 of 20

5. Question

Fortuitous means …

Fortunate
Accidental
In the future
Compensatory

Question 6 of 20

6. Question

An exceptionally high standard of honesty is implied by which of the following…

Misrepresentation
Utmost good faith
An application
An oral Contract

Question 7 of 20

7. Question

Which of the following is a moral hazard?

A slippery set of stairs
A bare electrical wire
An insured who regularly gets intoxicated and smokes in bed?
An improperly installed wood stove

Question 8 of 20

8. Question

The main purpose of insurance is

To spread the losses of the many among the few
To provide a fund from which all losses will be paid
To spread the losses of the few among the many
None of the above

Question 9 of 20

9. Question

The proximate cause is

The first cause in a chain of events that results in a loss
The cause the sets a remote cause of loss into motion
The suspected loss of a cause
The immediate and effective cause of loss

Question 10 of 20

10. Question

Which of the following are types of Insurable Risks?

Property Risks
Liability Risks
Personal Risks
All of the above

Question 11 of 20

11. Question

The insurance relating to operations such as retail stores is known as

Speciality Lines
Personal Lines
Boiler & Machinery Coverage
Commercial Insurance

Question 12 of 20

12. Question

Moral hazard refers to:

Subject matter of the insurance and those facts that can be determined by inspection
Those situations in which there is a chance of loss or a chance of profit
Condition of the property that may increase the likelihood of the occurrence of a loss
Conditions attributable to character that are hard to detect and difficult to eliminate

Question 13 of 20

13. Question

For an organization to achieve peace of mind it must operate within its tolerance level for uncertainty, which is the

Measure of value an organization places on safety as opposed to physical assets.
Degree to which a business can fail to satisfy a customer demand and survive.
Extent to which a company feels it can self-insure a portion of risk with little real change or loss.
Threshold beyond which an organization cannot survive financially.

Question 14 of 20

14. Question

The post-loss objective for a business that cannot survive even a few days of downtime is

stable earnings.
sustained growth.
profit.
operational continuity.

Question 15 of 20

15. Question

The major financial responsibility for an organization following a loss is to

maintain as many employees on the payroll as possible.
survive.
maintain market share.
cover the costs to achieve operational continuity

Question 16 of 20

16. Question

Which of the following is both a pre-loss objective and a post-loss objective of risk management?

Social responsibility
Peace of mind
Survival
Externally imposed obligations

Question 17 of 20

17. Question

Regular inspection and testing of machinery, safety training programs and safety guards on machinery are

exposure avoidance activities
risk transfer activities
loss reduction activities
loss prevention activities

Question 18 of 20

18. Question

When a broker/agent employs risk management techniques in working with a client, the

organization’s risks are analyzed and its needs are uncovered
broker’s primary consideration is securing affordable insurance coverage
organization’s existing insurance coverage is used as a guide to current needs
consequences of not identifying and analyzing the risks the organization faces may be critical

Question 19 of 20

19. Question

An organization that complies with its contractual obligations and meets its commitments to customers has sound practices in place to meet the pre-loss objective of

social responsibility
externally imposed obligations
its tolerance level for uncertainty
operational continuity

Question 20 of 20

20. Question

When an organization reduces the probability of loss to zero, it has successfully implemented the loss control technique of

avoidance
loss reduction
diversification
noninsurance risk transfer