Finance (insurance) homeworks 1 and 2 (all questions below)

From the insured's perspective, not owning or riding in an automobile is an example of which type of risk mitigation? 

Purposely leaving your old bicycle unlocked for thieves in order to collect insurance money for a new bicycle is a ________, while accidentally running into a bus while you were setting up a playlist on your mobile phone is a ___________. 

The principle of indemnity requires that: 

 To be technically correct, we should define "weather" as: 

The combination of a large number of exposure units by an insurer is important for the operation of insurance because: 

 The term "risk" is best defined as: 

Which of the following types of insurance is a "Personal-Involuntary-Private-Property & Liability" type of policy?

Which of the following is not required for an ideal insurable risk? 

 The possibility of loss resulting from a home fire is an example of: 

Which of the following would be an example of "loss prevention"? 

Which would be an example of a transfer of risk by "contractual arrangement"? 

 The willingness to pay a premium for car insurance that is higher than your expected losses represents: 

 Adverse selection is a term used to describe: 

 Involuntary and unintended retention occurs when

 Risk avoidance would be the best solution in all of the following instances except which one? 

 The elements of an ideal insurable risk: 

For the insurance company, a meaningful measure of risk is: 

 The type of insurance that is characterized by individual equity and contractual arrangements is generally referred to as: 

 Insurance which is required by law: 

Because of the fact that the terms of an insurance contract are fixed by the insurer instead of being determined by a bargaining process, the insurance policy is said to be 

 If an agent tells an insured that a breach of a policy condition will not affect the policy's coverages, and a loss occurs, the insurer may: 

You sell your car to a woman who responds to an ad you placed online, but you mistakenly pay the insurance renewal premium on the car after you sell it. During the policy term you find out that the woman you sold the car to was in an accident that caused extensive damage to the car.  Which of the following is true? 

 Insurance policies contain exclusions because

 One way the principle of indemnity is enforced is: 

Which of the following represents an exception to the principle of indemnity? 

An Insurance agent's authority to act on behalf of an insurer: 

One evening after a football win, you drink way too much beer. In your drunken stupor you make an aftermidnight deal and you sign a contract. The next day you realize what an idiot you were and you need to get out of the contract. Which requirement of a valid contract would allow this? 

 Which section of an insurance policy is unique to each individual insured

All of the following are correct statements about aleatory contracts, except which one? 

Because of the fact that the terms of an insurance contract are fixed by the insurer instead of being determined by a bargaining process, the insurance policy is said to be: 

From the insured's perspective, the purchase of insurance is an example of 

 Probability may be defined as 

 According to the law of large numbers, as the number of exposure units is increased 

Adverse selection 

Which of the following would permit the insurance company to void your automobile policy

 When there is a difference of opinion about the meaning of the terms in an insurance contract because they are capable of more than one interpretation, the courts 

Waiver 

In order to void a contract when the insured has made a misrepresentation, in most states the insurer must generally prove that the misrepresentation 

 In an insurance contract, subrogation provides that: 

 Which of the following does not constitute an insurable interest? 

 By definition, estoppel: 

In the event of a total loss to property insured under a stated value policy, payment will generally be made for 

 If an agent tells an insured that a breach of a policy condition will not affect the coverage and payment of a claim, and a loss occurs, the insurer may 

The term "hazard" refers to 

 General unemployment in a recession would generally be considered to be 

A peril, as distinguished from a hazard, is defined as 

 The type of retention that is always undesirable is 

 The ultimate goal of risk management is to 

 The risks most suited to treatment by insurance are those in which there is 

Those risks most suited to treatment by loss prevention are those in which