APA 92 Review

Question 0

A physical hazard is

Answer 0

A tangible condition of property, persons, or operations that increases the frequency or severity of loss

Question 1

A cause of loss, also known as peril, is the means by which

Answer 1

Property is damaged or destroyed

Question 2

A moral hazard is

Answer 2

A tendency for the insured to intentionally cause a loss

Question 3

A morale hazard arises from

Answer 3

The insureds carelessness or indifference

Question 4

Indemnification is a contractual arrangement in insurance whereby

Answer 4

One party (the insurer) agrees to indemnify a second party (insured) for financial losses that result from certain causes of loss

Question 5

Law of large numbers is

Answer 5

A mathematical principle stating that as the number of similar, independent exposure units increases, the relative accuracy of predictions about outcomes also increase

Question 6

The underwriting process protects insurers against hazards by

Answer 6

Requiring insureds to adopt measures necessary to avoid or reduce hazards, imposing a premium sufficient to cover losses resulting from hazards and declining coverage