CPCU 553 Ch. 1

Question 1

Any condition or situation that presents a possibility of loss, whether or not an actual loss occurs

Answer 1

Loss exposure

Question 2

The actual means by which property is damaged or destroyed

Answer 2

Cause of loss (peril)

Question 3

A condition that presents the possibility that a person or an organization will sustain a loss resulting from damage (including destruction, taking, or loss of use) to property in which that person or organization has a financial interet

Answer 3

Property loss exposure

Question 4

Tangible property consisting of land, all structures permanently attached to the land, and whatever is growing on the land

Answer 4

Real property (realty)

Question 5

All tangible or intangible property that is not real property

Answer 5

Personal property

Question 6

Any condition or situation that presents possibility of a claim alleging legal responsibility of a person or business for injury or damage suffered by another party

Answer 6

Liability loss exposure

Question 7

Money claimed by, or monetary award to, a party who has suffered bodily injury or property damage for which another party is legally responsible

Answer 7

Damages

Question 8

A monetary award to compensate a victim for losses, such as pain and suffering, that does not involve specific, measurable expenses

Answer 8

General damages

Question 9

A form of compensatory damages that awards a sum of money for specified, identifiable expenses associated with the injured person’s loss, such as medical expenses or lost wages

Answer 9

Special damages

Question 10

A payment awarded by court to punish a defendant for a reckless, malicious, or deceitful act to deter similar conduct; award need not bear any relation to party’s actual damage

Answer 10

Punitive damages (exemplary damages)

Question 11

A classification of law that applies to legal matters not governed by criminal law and that protects rights and provides remedies for breaches of duties owed to others

Answer 11

Civil law

Question 12

A wrongful act or an omission other than a crime or breach of contract, that invades a legally protected right

Answer 12

Tort

Question 13

The failure to exercise the degree of care that reasonable person in similar situation would exercise to avoid harming others

Answer 13

Negligence

Question 14

Life, health, and retirement related loss exposures

Answer 14

Personal financial planning loss exposures

Question 15

A disability caused by work related injury or disease that temporarily limits the extent to which a worker can perform job duties; the worker is eventually able to return to full duties and hours

Answer 15

Temporary partial disability (TPD)

Question 16

A disability caused by work-related injury or disease that temporarily renders an injured worker unable to perform any job duties for a period of time

Answer 16

Temporary total disability (TTD)

Question 17

A disability caused by work-related injury or disease that impairs the injured employee’s earning capacity for life, but the employee is able to work at reduced efficiencies

Answer 17

Permanent partial disability (PPD)

Question 18

A disability caused by work-related injury or disease that renders an injured employee unable to ever return to gainful employment

Answer 18

Permanent total disability (PTD)

Question 19

The method of making, implementing, and monitoring decisions that minimize the adverse effects of risk on an organization

Answer 19

Risk management process

Question 20

A conscious act or decision not to act that reduces the frequency and/or severity of losses or makes losses more predictable

Answer 20

Risk control

Question 21

A conscious act or decision not to act that generates the funds to pay for losses and risk control measures or to offset variability in cash flows

Answer 21

Risk financing

Question 22

A risk control technique that involves ceasing or never undertaking an activity so that the possibility of a future loss occurring from that activity is eliminated

Answer 22

Avoidance

Question 23

A risk control technique that reduces the frequency of a particular loss

Answer 23

Loss prevention

Question 24

A risk control technique that reduces the severity of a particular loss

Answer 24

Loss reduction

Question 25

A risk control technique that isolates loss exposures from one another to minimize the adverse effect of a single loss

Answer 25

Seperation

Question 26

A risk control technique that uses backups, spares, or copies of critical property, information, or capabilities and keeps them in reserve

Answer 26

Duplication

Question 27

A risk control technique that spreads loss exposures over numerous projects, products, markets, or regions

Answer 27

Diversification

Question 28

A risk financing techniques by which losses are retained by generating funds within the organization to pay for the losses

Answer 28

Retention

Question 29

A risk management technique that transfers the potential financial consequences of certain specified loss exposures from the insured to insurer

Answer 29

insurance

Question 30

In the context of risk management, a risk financing technique by which the financial responsibility for losses and variability in cash flows is shifted to another party

Answer 30

Transfer

Question 31

A system that pays lost wages, medical, and vocational rehabilitation expenses, and death benefits to injured workers or their dependents for employment related to injuries and diseases

Answer 31

Workers Compensation

Question 32

Any phrase or clause in an insurance policy that describes the policy’s coverage, exclusions, limits, conditions, or other features

Answer 32

Policy provision

Question 33

An insurance policy information page or pages providing specific details about the insured and subject of insurance

Answer 33

Declarations page

Question 34

A document that amends and insurance policy

Answer 34

Endorsement

Question 35

A section of an insurance policy that defines terms used throughout the policy form

Answer 35

Definitions

Question 36

A statement in an insurance policy that the insurer will, under describes circumstances, makes a loss payment or provide a service

Answer 36

Insuring agreement

Question 37

Any policy provision that qualifies an otherwise enforceable promise made on the policy

Answer 37

Policy condition

Question 38

A policy provision that eliminates coverage for specified exposures

Answer 38

Exclusion