Hazards & risk

Question 1

Speculative risk

Answer 1

Could get a gain
can’t be insured

Question 2

Risk

Answer 2

-to take on finical loss
-insured item

Question 3

pure risk

Answer 3

no chance of gain only restoration
can be insured

Question 4

Exposure

Answer 4

The extent of insured item is to loss

Question 5

Hazard

Answer 5

anything that increases exposure

Question 6

Peril

Answer 6

Actual cause of loss

Question 7

named peril

Answer 7

lists each peril is covered

Question 8

all peril

Answer 8

covers everything but lists what’s not included

Question 9

What are the 3 things that define a loss

Answer 9

value deducted of insured item
expenses caused by a loss
insurers: the amount paid to restore

Question 10

Adequate premiums

Answer 10

insurer must be able to cover claims w premium income

Question 11

Definable risk

Answer 11

define the exact state insured risk is in
item is definable
item has a precise value

Question 12

Unexpected losses

Answer 12

unforeseeable bad events

Question 13

Substaintal losses

Answer 13

loss must cause economic hardship

Question 14

Exclusions

Answer 14

must exclude coverage for catastrophic and large scale events

Question 15

Law of Large Numbers

Answer 15

a large number of similar risks must be insured this helps predict losses more accurately to set premiums

Question 16

Adverse Selection

Answer 16

When you buy insurance because you know you’re more likely to use it because they can’t discriminate against you. therefore high risk people are charged high risk premiums