Chapter 2

Question 1

Fire Resistive

Answer 1

Buildings which have met minimum standards
in terms of hours it will withstand a specific,
carefully controlled test fire

Question 2

Non-Combustible

Answer 2

All structural members, including floors, roofs,
and their supports are constructed of steel, iron,
concrete or other noncombustible materials. Falls
just short of fire resistive

Question 3

Common Hazards

Answer 3

Conditions common to all buildings which
influence their potential for loss

Question 4

Detachment

Answer 4

Refers to the proximity of the building insured
or containing the property insured to other
commercially rated buildings

Question 5

Adverse Selection

Answer 5

Occurs when the applicants for insurance are
largely those most likely to suffer a loss

Question 6

Risk Classification

Answer 6

Refers to the grouping or classifying of risks
according to established criteria which, in large
part, is based on their probability for loss as a
class

Question 7

Soft Market

Answer 7

Characterized by intense competition between
insurers resulting in low rates and broader
coverages

Question 8

Hard Market

Answer 8

Occurs when low profit margins force out some
of the competition resulting in a more disciplined
underwriting approach where insureds receive
little or nothing in rate discounts

Question 9

Hazard

Answer 9

A condition which may cause a peril to occur

Question 10

Physical Hazard

Answer 10

Conditions relating to the use of tangible
property which could cause a peril to occur

Question 11

Moral Hazard

Answer 11

Subjective characteristics of the applicant that
could cause a peril to occur

Question 12

Accommodation Business

Answer 12

Business which is marginal or substandard but
which the insurer agrees to accept as a favor or
accommodation to the broker

Question 13

Supporting Business

Answer 13

Existence of other insurance policies the applicant
has with the same insurer