RMIN 4000 Exam 3 Questions and
Answers | Latest Update | 2024/2025 |
100% Pass
What is the purpose of risk pooling in insurance?
Risk pooling spreads the financial impact of risks across a large group, reducing the burden
on any individual member.
How does the principle of indemnity wo...
✔✔ Risk pooling spreads the financial impact of risks across a large group, reducing the burden
on any individual member.
How does the principle of indemnity work in insurance?
✔✔ The principle of indemnity ensures that the insured is compensated for a loss to the extent of
their financial loss, but not more.
What is the difference between a liability insurance policy and a property insurance policy?
✔✔ Liability insurance covers legal responsibilities for damage or injury to others, while
property insurance covers damage to one's own property.
Why is it important for insurers to assess risk before issuing a policy?
✔✔ Risk assessment helps insurers determine appropriate premiums and coverage limits based
on the likelihood and potential impact of claims.
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,What is a deductible in an insurance policy?
✔✔ A deductible is the amount the insured must pay out-of-pocket before the insurance
coverage kicks in.
How does reinsurance help insurance companies manage risk?
✔✔ Reinsurance allows insurers to share or transfer some of their risk to other insurance
companies, reducing their potential losses.
What is the purpose of a waiting period in some insurance policies?
✔✔ A waiting period delays the start of coverage to prevent insurance claims for pre-existing
conditions or immediate losses.
What is the function of underwriting in the insurance process?
✔✔ Underwriting involves evaluating and selecting risks to determine the terms and conditions
of the insurance coverage.
How does an exclusion in an insurance policy affect coverage?
2
,✔✔ An exclusion specifies certain risks or situations that are not covered by the policy, limiting
the insurer’s liability.
What is a premium in the context of insurance?
✔✔ A premium is the amount paid periodically by the insured to maintain the insurance policy.
What is the role of an insurance adjuster?
✔✔ An insurance adjuster investigates and assesses the extent of a loss to determine the amount
of compensation owed to the insured.
How can loss control measures help reduce insurance premiums?
✔✔ Loss control measures, such as safety protocols and regular maintenance, reduce the
likelihood of claims, which can lower insurance premiums.
What is the difference between first-party and third-party insurance coverage?
✔✔ First-party coverage protects the insured's own property or interests, while third-party
coverage protects against claims made by others.
Why is it important for insurers to have a clear claims process?
3
, ✔✔ A clear claims process ensures that claims are handled efficiently and fairly, providing
timely compensation to policyholders.
What is a rider in an insurance policy?
✔✔ A rider is an additional provision or endorsement added to a policy to modify or extend
coverage.
How does the concept of moral hazard affect insurance claims?
✔✔ Moral hazard occurs when the insured takes on higher risks because they know they are
covered by insurance, potentially leading to increased claims.
What is the significance of having an aggregate limit in an insurance policy?
✔✔ An aggregate limit sets a maximum amount that the insurer will pay for all claims during a
policy period, controlling their overall exposure.
What is the purpose of liability coverage in an insurance policy?
✔✔ Liability coverage helps pay for legal costs and damages if you are found legally responsible
for causing injury or property damage to others.
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