Mission INS21: Assessment # 1

Liability insurance is also known as "Third-party insurance" because it provides coverage for damages or injuries caused by the insured to a third party. This type of insurance protects the insured from financial losses if they are found legally responsible for causing harm to someone else's property or causing injury to another person. It is called "Third-party insurance" because it focuses on providing coverage for the claims made by third parties, rather than the insured themselves.

Indemnify is the correct answer because it refers to the act of compensating or reimbursing someone for their loss or damage. In insurance, it means restoring the insured party to the same financial position they were in before the covered loss occurred. This can be done through payment, repair, replacement, or other forms of compensation. Subrogate refers to the process of an insurer taking legal action against a third party to recover their expenses, while recoup means recovering losses or expenses. Rectify means to correct or remedy a situation.

Underwriting is the process by which insurers assess the risks associated with potential customers and determine whether to provide them with insurance coverage. It involves evaluating various factors such as the individual's health, age, occupation, and past insurance claims to determine the likelihood of future claims. Based on this evaluation, insurers decide on the terms of coverage, including the premium amount and any exclusions or conditions. Underwriting plays a crucial role in maintaining the financial stability of insurance companies by ensuring that they only accept risks that align with their underwriting guidelines and risk appetite.

Fire does not fall under the catastrophe category because it is typically considered a disaster rather than a catastrophe. While fires can cause significant damage and loss of life, they are often localized events that can be contained and controlled. In contrast, catastrophes are typically large-scale events that cause widespread destruction and have long-lasting impacts. Fire can be devastating, but it does not typically meet the criteria of a catastrophe in terms of scale and impact.

An insurance company pays for covered losses and, in effect, distributes the costs of losses among all insureds. This means that the individuals who have purchased insurance policies from the company are the ones who bear the costs of losses through their premiums. By pooling the risk and spreading the costs among the insureds, the insurance company is able to provide financial protection to its policyholders in the event of covered losses.

Tenants insurance is not provided by the federal government. It is a type of insurance that is typically purchased by individuals who are renting a property to protect their personal belongings and provide liability coverage. The federal government does provide insurance in the form of flood insurance, crop insurance, and Social Security. Flood insurance is offered through the National Flood Insurance Program, crop insurance is provided by the Department of Agriculture, and Social Security is a federal program that provides retirement, disability, and survivor benefits.

The correct answer is "Satisfaction of legal requirements." Joan Appleton is required to provide proof of liability insurance when registering her new car. This indicates that having insurance is a legal requirement in this situation.

According to the law of large numbers, as the number of similar but independent exposure units increases, the relative accuracy of predictions about future outcomes based on these exposure units also increases. This is because with a larger sample size, the predictions become more reliable and representative of the entire population. The law of large numbers states that as the sample size increases, the average of the sample approaches the true population mean. Therefore, more exposure units provide a better estimation of future outcomes.

Ideally insurable loss exposures should have certain characteristics to be effectively covered by insurance. These include losses that are definite and measurable, losses that are accidental, and a large number of similar exposure units. However, a large concentration of financial capacity is not a characteristic of ideally insurable loss exposures. This means that having a large amount of financial resources does not determine whether a loss exposure is insurable or not.

An explosion of an industrial factory steam boiler is most likely to have the characteristics of an ideally insurable loss exposure. This is because it is a sudden and accidental event that is unpredictable and beyond the control of the insured. Additionally, it is a large-scale event that could result in significant financial loss, making it a suitable risk to transfer to an insurance company.

Insurance is not a barter between the insured and the insurer. Barter refers to the exchange of goods or services without the use of money. In insurance, the insured pays a premium to the insurer in exchange for coverage and protection against financial loss. This transaction involves the transfer of money, making it different from a barter.

Government insurance programs exist because the government has the necessary financial resources. This means that the government has the ability to fund and sustain insurance programs, ensuring that individuals have access to insurance coverage. By having the necessary financial resources, the government can provide support and assistance to those who may not be able to afford private insurance or who may be considered high-risk individuals. This helps to ensure that a larger portion of the population is protected and has access to necessary healthcare services.

The correct answer is A property loss exposure relating to real property. This is because the question is asking about the possibility of Chuck's house being damaged by fire, which is a property loss exposure. Real property refers to land and any structures built on it, so the possibility of Chuck's house being damaged by fire is directly related to real property.

Loss exposure refers to the possibility of a loss occurring. This means that a loss exposure can exist even if a loss has not yet occurred. The statement "It is necessary for a loss to occur for a loss exposure to exist" is incorrect because a loss exposure can exist without an actual loss happening. Therefore, all of the given statements regarding loss exposures are true, except for this one.

John's retirement can be considered a personnel loss exposure for Alloto, Inc. because it involves the loss of an experienced employee who has been with the company for a long time. This loss can have significant implications for the company in terms of knowledge and expertise that John possesses, as well as the need to find a replacement and potentially train them. Additionally, John's retirement may also impact team dynamics and morale within the organization.