Study 1:Introduction to Risk and Insurance

Question 1

What type of risk is insurance only concerned with?

Answer 1

Pure Risk.

Question 2

What are the three types of insurable risks?

Answer 2

Personal Risks, Property Risks and Liability Risks.

Question 3

Explain Personal risks?

Answer 3

The chance of loss arising from a persons own bodily injury, loss of life or loss of income. (death, physical injury, old age, unemployment)

Question 4

explain property risks?

Answer 4

chance of loss arising from destruction of the property insured. (direct or indirect loss)

Question 5

explain Liability risks?

Answer 5

Chance of loss arising from an individuals legal obligation to pay damages because of the injury or death to another or their property.

Question 6

explain proximate cause?

Answer 6

It is the immediate and effective cause of loss, which in a chain of circumstances leads naturally and directly to the loss. IT IS NOT NECCESSARILY THE LAST EVENT BEFORE THE OCCURENECE.

Question 7

explain remote cause?

Answer 7

a cause that is not the proximate cause. (does not recover from insurer)

Question 8

explain immediate cause

Answer 8

the last link in the chain. (does not recover from insurer)