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AINS 21 CHAPTER ONE PRACTICE EXAM
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AINS 21 CHAPTER ONE PRACTICE EXAM
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AINS 21 CHAPTER ONE PRACTICE EXAMSome loss exposures are not easy to retain, avoid, or control. Which one of the
following risk management techniques is frequently used to treat such exposures? -
Answers-Transfer
A loss exposure is: - Answers-Any condition that presents the possibility of a loss.
Another name for liability insurance is: - Answers-Third-Party Insurance
Insurance is not the only risk management transfer technique. When circumstances are
appropriate, transfer can be accomplished through: - Answers-Noninsurance transfer
techniques.
Retention is often used in combination with insurance as a way of treating loss
exposures. One of the major downsides of individuals using retention alone is: -
Answers-The potential for financial ruin.
From a risk management viewpoint, insurance is used to: - Answers-Transfer the cost of
losses
Private insurers are reluctant to provide windstorm insurance on coastal properties. This
is because the loss exposures fail to meet the criterion that ideally insurable exposures
must be: - Answers-Independent and not catastrophic
Which one of the following statements is correct with respect to characteristics of
insurable loss exposures? - Answers-If losses are not fortuitous, premiums could
increase for all policyholders.
Ideally insurable loss exposures are subject to losses that: - Answers-Are definite in
time, cause, and location
Which one of the following is an example of a fortuitous loss? - Answers-An unknown
vandal spray-paints graffiti on the insured's garage
Insurance deals primarily with loss exposures that are fortuitous. Which one of the
following statements best characterizes fortuitous losses? - Answers-Fortuitous losses
are beyond the insured's control
The process of restoring an individual or organization to a pre-loss financial condition is
the process of: - Answers-Indemnification
Pravalt Construction Company pays less than its competitors for workers compensation
insurance because Pravalt has had substantially fewer employee injuries than other
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