Question 1

Apple has an insurable interest in the lives of its top executives.

Accepted Answer

A) True 
 B)False

Question 2

Insurance companies will provide coverage only for losses that are accidental.

Accepted Answer

A) True 
 B)False

Question 3

Risky Business Insurance Company insures business clients against unexpected disasters such as tornadoes and floods. The company operates in several regions in the U.S., and negotiates contracts following standard insurance industry guidelines. A strategic business guideline that the company would follow is

Accepted Answer

A)   The amount of loss should be equal to or less than a loss covered by a competitor company.
B)   There should be documentation that clearly attests to the fact that the loss of buildings, equipment, and even lives is not measurable.
C)   The company's clients should be dispersed among several geographic areas so that the lack of natural disasters in some areas will compensate for more natural disasters in other areas.
D)   All insurance companies that sell similar insurance would equally divide the number of claims, so as not to compete unfairly against each other.E) A) and B)
F) A) and C)

Question 4

The best strategy for a profit-seeking insurance company would be to specialize in providing protection to people in a specific geographical area.

Accepted Answer

A) True 
 B)False

Question 5

Insurable interest means that the policyholder is the one at risk to suffer a loss.

Accepted Answer

A) True 
 B)False

Question 6

Insurance companies make predictions such as how recent health trends will affect the number of heart attacks that men in the United States over the age of 45 will suffer.

Accepted Answer

A) True 
 B)False

Question 7

When one of Waata's employees was stocking a particularly high shelf one morning; he reached a bit too far and fell off the ladder. Luckily he just broke his arm and returned to work later that day. His medical bills due to this accident were covered under

Accepted Answer

A)   workers' compensation.
B)   disability insurance.
C)   liability insurance.
D)   his own health insurance.E) B) and D)
F) B) and C)

Question 8

Product liability insurance covers liability arising out of defective products sold.

Accepted Answer

A) True 
 B)False

Question 9

Enterprise risk management is

Accepted Answer

A)   important to business.
B)   irrelevant to business.
C)   only used by nonprofit organizations.
D)   only used by the Department of Homeland Security.E) B) and D)
F) All of the above

Question 10

Workers' compensation insurance

Accepted Answer

A)   covers people who are found liable for professional negligence.
B)   provides coverage against liability arising out of products sold.
C)   is only required by 48 states.
D)   guarantees payment of wages and medical costs for employees who are injured on the job.E) B) and D)
F) A) and B)

Question 11

A fidelity bond covers losses resulting from a second party's failure to fulfill a contract.

Accepted Answer

A) True 
 B)False

Question 12

DeMario was turned down when he attempted to buy a life insurance policy on his former Introduction to Business instructor. The most likely reason the insurance company turned down his attempt to insure the life of his former instructor was that

Accepted Answer

A)   the chance of the loss could not be measured.
B)   he did not have an insurable interest in the instructor's life.
C)   the instructor had already taken out a policy.
D)   the loss would not be accidental.E) A) and D)
F) None of the above

Question 13

Risk management involves minimizing the losses from unexpected events.

Accepted Answer

A) True 
 B)False

Question 14

SpeedyTime Delivery requires their drivers to wear seat belts as they operate their trucks. This is an example of self-insuring as a risk management strategy.

Accepted Answer

A) True 
 B)False

Question 15

Explain what makes the acceptance of risk possible for insurance companies.

Accepted Answer

The law of large numbers states that if ...

Question 16

Most homeowners' insurance policies automatically provide adequate coverage for small home-based businesses.

Accepted Answer

A) True 
 B)False

Question 17

AutoPROs recalled thousands of tires when several people died in traffic accidents blamed on faulty tires. This is an example of which of the following?

Accepted Answer

A)   avoiding the risk
B)   self-insuring against the risk
C)   reducing the risk
D)   a loss-prevention programE) B) and C)
F) A) and B)

Question 18

________ insurance replaces part of your income if you become unable to work for an extended period of time.

Accepted Answer

A)   Product liability
B)   Workers' compensation
C)   Professional liability
D)   DisabilityE) B) and C)
F) A) and D)

Question 19

One afternoon Waata was called to the café. One of Waata's staff had inadvertently spilled hot coffee on a customer's arm and the customer was left with a burn. Waata sent the customer off to the local hospital for treatment knowing that his ________ insurance would cover the claim.

Accepted Answer

A)   extended product liability
B)   malpractice
C)   public liability
D)   major medicalE) A) and B)
F) A) and C)

Question 20

A mutual insurance company is owned by its policyholders.

Accepted Answer

A) True 
 B)False

Exam 23: Appendix: Managing Risk

One afternoon Waata was called to the café. One of Waata's staff had inadvertently spilled hot coffee on a customer's arm and the customer was left with a burn. Waata sent the customer off to the local hospital for treatment knowing that his ________ insurance would cover the claim.

Correct Answer
verified

Explain what makes the acceptance of risk possible for insurance companies.

Correct Answer
verified
The law of large numbers states that if ...
View Answer

Insurable interest means that the policyholder is the one at risk to suffer a loss.

Correct Answer
verified

DeMario was turned down when he attempted to buy a life insurance policy on his former Introduction to Business instructor. The most likely reason the insurance company turned down his attempt to insure the life of his former instructor was that

Correct Answer
verified

________ insurance replaces part of your income if you become unable to work for an extended period of time.

Correct Answer
verified

Correct Answer
verified

Risk management involves minimizing the losses from unexpected events.

Correct Answer
verified

Workers' compensation insurance

Correct Answer
verified

A fidelity bond covers losses resulting from a second party's failure to fulfill a contract.

Correct Answer
verified

AutoPROs recalled thousands of tires when several people died in traffic accidents blamed on faulty tires. This is an example of which of the following?

Correct Answer
verified

Most homeowners' insurance policies automatically provide adequate coverage for small home-based businesses.

Correct Answer
verified

SpeedyTime Delivery requires their drivers to wear seat belts as they operate their trucks. This is an example of self-insuring as a risk management strategy.

Correct Answer
verified

Enterprise risk management is

Correct Answer
verified

Product liability insurance covers liability arising out of defective products sold.

Correct Answer
verified

A mutual insurance company is owned by its policyholders.

Correct Answer
verified

Insurance companies will provide coverage only for losses that are accidental.

Correct Answer
verified

Apple has an insurable interest in the lives of its top executives.

Correct Answer
verified

When one of Waata's employees was stocking a particularly high shelf one morning; he reached a bit too far and fell off the ladder. Luckily he just broke his arm and returned to work later that day. His medical bills due to this accident were covered under

Correct Answer
verified

Insurance companies make predictions such as how recent health trends will affect the number of heart attacks that men in the United States over the age of 45 will suffer.

Correct Answer
verified

The best strategy for a profit-seeking insurance company would be to specialize in providing protection to people in a specific geographical area.

Correct Answer
verified

Exam 23: Appendix: Managing Risk

One afternoon Waata was called to the café. One of Waata's staff had inadvertently spilled hot coffee on a customer's arm and the customer was left with a burn. Waata sent the customer off to the local hospital for treatment knowing that his ________ insurance would cover the claim.

Correct AnswerverifiedShow Answer

Explain what makes the acceptance of risk possible for insurance companies.

Correct AnswerverifiedThe law of large numbers states that if ...View AnswerShow Answer

Insurable interest means that the policyholder is the one at risk to suffer a loss.

Correct AnswerverifiedShow Answer

DeMario was turned down when he attempted to buy a life insurance policy on his former Introduction to Business instructor. The most likely reason the insurance company turned down his attempt to insure the life of his former instructor was that

Correct AnswerverifiedShow Answer

________ insurance replaces part of your income if you become unable to work for an extended period of time.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Risk management involves minimizing the losses from unexpected events.

Correct AnswerverifiedShow Answer

Workers' compensation insurance

Correct AnswerverifiedShow Answer

A fidelity bond covers losses resulting from a second party's failure to fulfill a contract.

Correct AnswerverifiedShow Answer

AutoPROs recalled thousands of tires when several people died in traffic accidents blamed on faulty tires. This is an example of which of the following?

Correct AnswerverifiedShow Answer

Most homeowners' insurance policies automatically provide adequate coverage for small home-based businesses.

Correct AnswerverifiedShow Answer

SpeedyTime Delivery requires their drivers to wear seat belts as they operate their trucks. This is an example of self-insuring as a risk management strategy.

Correct AnswerverifiedShow Answer

Enterprise risk management is

Correct AnswerverifiedShow Answer

Product liability insurance covers liability arising out of defective products sold.

Correct AnswerverifiedShow Answer

A mutual insurance company is owned by its policyholders.

Correct AnswerverifiedShow Answer

Insurance companies will provide coverage only for losses that are accidental.

Correct AnswerverifiedShow Answer

Apple has an insurable interest in the lives of its top executives.

Correct AnswerverifiedShow Answer

When one of Waata's employees was stocking a particularly high shelf one morning; he reached a bit too far and fell off the ladder. Luckily he just broke his arm and returned to work later that day. His medical bills due to this accident were covered under

Correct AnswerverifiedShow Answer

Insurance companies make predictions such as how recent health trends will affect the number of heart attacks that men in the United States over the age of 45 will suffer.

Correct AnswerverifiedShow Answer

The best strategy for a profit-seeking insurance company would be to specialize in providing protection to people in a specific geographical area.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
The law of large numbers states that if ...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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