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Exam 19: Risk Management and Insurance

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Question 1

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What is the name given to the process of evaluating risks and minimizing the costs associated with those risks?

A) Financial management
B) Risk management
C) Management planning
D) Loss prevention

E) None of the above
F) All of the above

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Question 2

Multiple Choice

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What is the purpose of no-fault insurance?

A) Provide insurance for all vehicles registered in the state
B) Reduce court case loads and premium costs
C) Eliminate finger-pointing for auto accident claims
D) Limit the rights of insured individuals

E) All of the above
F) B) and C)

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Question 3

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Which of the following is not one of the four risk management techniques?

What is the name given to recipients of life insurance proceeds?

Which of the following businesses is most likely to purchase a fidelity bond?

What is the purpose for individuals or businesses purchasing and using safety equipment?

Suppose that early this year you buy a home valued at $180,000 and purchase $200,000 worth of fire insurance on it.According to the principle of indemnity,what amount of money would the insurer pay you if the home were totally destroyed by fire?

What is the name given to an insurance plan that directly employs or contracts with selected physicians and hospitals to provide health care services in exchange for a fixed,prepaid monthly premium?

What is the purpose of self-insurance?

What is the name given to the fee charged by an insurance company to cover a business for possible loss due to fire?

What is the purpose of business liability coverage?

What is the name given to the clause in an insurance policy that makes it uneconomical to underinsure one's property?

Alicia Simmons purchased a standard fire insurance policy with an endorsement for extended coverage.She incurred damage due to nuclear radiation and filed a claim with her insurance company.Why would her insurance company refuse to cover her claim?

DeToya Blackburn,owner of DeTo Black Music Supplies,Inc.,has had her business up and running for just nine months.A large fire a few blocks away destroyed two small businesses and has made DeToya more concerned about the risk she endures with her own business.DeToya's inventory of musical instruments,sheet music,and repair tools for proper instrument repair could all be destroyed if a similar disaster were to occur in her own business.Due to the DeToya's reliance on the income that the shop generates and the risk associated with potential disaster,she has contacted Tom Sanders,an insurance agent,about insuring DeTo Black Music Supplies from a disaster such as fire.What type of risk would DeToya suffer if her business caught fire?

Who is responsible for paying the premiums for unemployment insurance coverage that covers eligible unemployed workers?

Which of the following is not a type of insurance that is available through either federal or state governments?

What is another name for whole life insurance?

Which of the following is not an insurable loss?

What type of risk is uninsurable?

A music store owner is considering expanding the offerings of her business (which currently only includes instrument and sheet music sales) to include instrument rental.What type of risk would accompany the possibility of earning a profit from this extension of the business?