The risks most suited to treatment by insurance are those in which there is a low probability and a high potential severity Those risks most suited to treatment by loss prevention are those in which the probability and severity are both high With respect to the purchase of insurance, the rule "consider the odds" suggests that one should
Full Answer
How do you minimize the risk of uninsured losses?
minimize insurance expenditures. make certain that uninsured losses do not occur. minimize the adverse effects of losses and uncertainty connected with risks. guarantee the attainment of company goals will not be prevented by losses.
What are the different types of loss coverage?
This type of coverage is referred to as: a. Direct loss coverage b. Inconsequential loss coverage c. Hazardous conditions insurance d. Adverse selection coverage e. Indirect loss coverage
What does it mean to protect the insured against loss?
protect subsequent purchasers against loss resulting from a defective title transferred to them by the insured. defend the insured in the event of legal action in connection with losses not excluded by the policy. defend the insured in the event of legal action in connection with losses not excluded by the policy.
What factors affect the probability of loss on insurance policies?
cost, financial stability, and treatment of policyholders. treatment of policyholders, cost, and agent. makes the chance of loss decline. makes the chance or probability of loss increase.
What type of risk involves the potential for loss and the possibility for gain?
Speculative risksSpeculative risks involve the possibility of loss and gain. Pure risks involve the possibility of loss only.
Which risk management step is concerned with the severity of a loss?
Risk avoidance and risk reduction are two strategies to manage risk. Risk avoidance deals with eliminating any exposure to risk that poses a potential loss, while risk reduction deals with reducing the likelihood and severity of a possible loss.
What is loss in risk management?
Loss — (1) The basis of a claim for damages under the terms of a policy. (2) Loss of assets resulting from a pure risk. Broadly categorized, the types of losses of concern to risk managers include personnel loss, property loss, time element loss, and legal liability loss.
Which of the following is an example of retaining risk?
An insurance deductible is a common example of risk retention to save money, since a deductible is a limited risk that can save money on insurance premiums for larger risks. Businesses actively retain many risks — what is commonly called self-insurance — because of the cost or unavailability of commercial insurance.
What is preventive risk?
Risk prevention is the process of avoiding risk or reducing the probability and impact of risk. The following are common elements of a risk prevention process.
What are the four categories of loss in risk management?
risk management Overview Organizations must effectively manage four categories of loss exposures: property, liability, personnel, and net income loss exposures. Understanding the definitions of these loss exposures helps insurance personnel to properly identify and analyze them.
What is a risk control and loss prevention?
Loss prevention generally includes proactive measures to prevent or abate potential risks. This may be in the form of improved safety and training programs; implementing new, less hazardous processes; programs/projects to reduce injuries and property loss; and/ or general safety enhancements.
What is loss prevention?
Loss prevention refers to the steps businesses take to reduce profit loss. The causes of profit loss, addressed by loss prevention, include theft, fraud, and human errors.
What is loss prevention control?
Loss Prevention and Control is as the name states, identification and evaluation of risks before they become losses. It is necessary to carry out the ongoing role of risk identification and evaluation to protect and prevent personal injury and suffering before the damage or injury occurs.
What are the methods used in risk retention?
The basic methods for risk management—avoidance, retention, sharing, transferring, and loss prevention and reduction—can apply to all facets of an individual's life and can pay off in the long run. Here's a look at these five methods and how they can apply to the management of health risks.
Which of the following is the most common way to transfer risk?
The most common way to transfer risk is through an insurance policy, where the insurance carrier assumes the defined risks for the policyholder in exchange for a fee, or insurance premium, and will cover the costs for worker injuries and property damage.
What is an example of risk retention When is this strategy most appropriate?
Examples of risk retention are self-insurance, insurance policy deductibles, and noninsurance. This strategy is most appropriate when both the probability of a risk materializing and the severity of its impact are low.
Question
Those risks most suited to treatment by loss prevention are those in which a. the probability is low and the potential severity is high. b. the probability and potential severity are both low. c. the probability and potential severity are both high. d. the probability is high and the potential severity is low. e. None of the above.
Insurance
Insurance is a tool used to manage risk. It entails buying financial protection against downside exposures from an insurance company in exchange for a fee, known as a premium.
Answer and Explanation: 1
The answer is c. the probability and potential severity are both high. This type of risk would be way to costly to assume and to insure.
How to manage life insurance?
manage the proceeds of life insurance payable at the time of death. make premiums paid for life insurance tax-deductible by the payer. manage the distributions of cash value from insurance policies. avoid â incidents or ownershipâ in life insurance that makes the proceeds taxable.
What are speculative risks?
speculative risks, enterprise risks, and financial risks. personal risks, property risks, liability risks, and risks arising out of the failure of others. personal risks, property risks, liability risks, and risks arising out of the failure of others.
What is a modified life insurance policy?
the common disaster clause. A life insurance policy that is written to insure two or more persons with the face amount payable upon the death of the first insured to die is called. a modified life policy. a convertible term policy. a joint and survivorship policy.
What is a group of health care providers?
is a group of health care providers contracted by an employer or insurer to provide services. is an insurer approved by the state commissioner of insurance. is a health insurer selected by a group of physicians. usually charges higher fees than other providers in the area.
When is an insurer obligated to pay damages?
the insurer is obligated to pay damages only when the insured is legally liable. the injured party has a direct claim against the insurance company. the insurer promises to defend any suits involving the type of liability insured. the injured party has a direct claim against the insurance company.
What is underwriting error?
the choice of the wrong insurance to fit a specific need. an underwriting error on the part of an insurance company. the tendency of the poorer than average risks to seek insurance to a greater extent than do the better than average risks. a loss situation in which the chance of loss cannot be determined.
What are the factors that determine the order of an insurance company?
The most important factors in selecting an insurance company, in order of importance are: financial stability, treatment of policyholders, and cost. cost, financial stability, and treatment of policyholders. agent, cost, and financial stability. treatment of policyholders, cost, and agent.