Unit 1 Flashcards
Employer worrying about employees taking inventory without paying for them. What kind of hazard?
Moral hazard
Ability to predict the approximate number of deaths or frequency of disabilities within a certain group during a specific time
Law of large numbers
Not an example of risk avoidance
Pat pays his premium insurance
Which risks are insurable?
Pure risks
Features of insurable risk?
Due to chance, must be measurable, cannot be catastrophic, loss exposures must be large
Define risk
Uncertainty regarding financial loss
Buying insurance is one of the most effective ways of
Transferring risk
Function of insurance
Spreads financial risk over a large group to minimize the loss to any one individual
A tornado is an example of
A peril
Putting an expensive ring in a bank deposit when not wearing is and example of risk
Reduction
