Mission INS21: Assessment # 1

Reviewed by Editorial Team
The ProProfs editorial team is comprised of experienced subject matter experts. They've collectively created over 10,000 quizzes and lessons, serving over 100 million users. Our team includes in-house content moderators and subject matter experts, as well as a global network of rigorously trained contributors. All adhere to our comprehensive editorial guidelines, ensuring the delivery of high-quality content.
Learn about Our Editorial Process
| By Vsgurunath
V
Vsgurunath
Community Contributor
Quizzes Created: 1 | Total Attempts: 1,530
| Attempts: 1,530
Quiz Flashcard
SettingsSettings
Please wait...
  • 1/15 Questions

    Which line of insurance is also known as “Third-party insurance”?

    • Property Insurance
    • Liability Insurance
    • Life Insurance
    • Health Insurance
Please wait...
About This Quiz

This quiz tests your understanding in the concepts discussed from Chapter-1 of 'Property and Liability Insurance Principles, 4th Edition'.

Mission INS21: Assessment # 1 - Quiz

Quiz Preview

  • 2. 

    In insurance, the term that means restoring a party who has had a covered loss to the same financial position that the party held before the loss occurred is

    • Subrogate

    • Recoup

    • Indemnify

    • Rectify

    Correct Answer
    A. Indemnify
    Explanation
    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.

    Rate this question:

  • 3. 

    What is the process by which insurers decide which potential customers to insure and what coverage to offer them? 

    • Reinsuring

    • Marketing

    • Prospecting

    • Underwriting

    Correct Answer
    A. Underwriting
    Explanation
    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.

    Rate this question:

  • 4. 

    Which of these do not fall under the catastrophe category?

    • Fire

    • Hurricane

    • Earthquake

    • Flood

    Correct Answer
    A. Fire
    Explanation
    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.

    Rate this question:

  • 5. 

    An insurance company pays for covered losses and, in effect, distributes the costs of losses among all 

    • Insurers in a state.

    • Insureds.

    • Members of society.

    • Claimants.

    Correct Answer
    A. Insureds.
    Explanation
    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.

    Rate this question:

  • 6. 

    All of the following are types of insurance provided by the federal government EXCEPT:

    • Flood insurance

    • Crop insurance

    • Tenants insurance

    • Social Security

    Correct Answer
    A. Tenants insurance
    Explanation
    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.

    Rate this question:

  • 7. 

    Joan Appleton has purchased a new car, and when registering her vehicle, she is told that she must provide proof of liability insurance.  Which one of the following benefits of insurance applies to Joan's situation? 

    • Support for credit

    • Satisfaction of legal requirements

    • Efficient use of resources

    • Reduction of social burdens

    Correct Answer
    A. Satisfaction of legal requirements
    Explanation
    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.

    Rate this question:

  • 8. 

    According to law of large numbers:

    • As the number of similar but independent exposure units decreases, the relative accuracy of predictions about future outcomes based on these exposure units increases.

    • As the number of similar but independent exposure units increases, the relative accuracy of predictions about future outcomes based on these exposure units decreases.

    • As the number of similar but independent exposure units increases, the relative accuracy of predictions about future outcomes based on these exposure units remains constant.

    • 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.

    Correct Answer
    A. 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.
    Explanation
    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.

    Rate this question:

  • 9. 

    All of the following are characteristics of ideally insurable loss exposures, EXCEPT: 

    • Losses that are definite and measurable

    • Losses that are accidental

    • Large number of similar exposure units

    • Large concentration of financial capacity

    Correct Answer
    A. Large concentration of financial capacity
    Explanation
    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.

    Rate this question:

  • 10. 

    Which one of the following is most likely to have the characteristics of an ideally insurable loss exposure? 

    • Explosion of an industrial factory steam boiler

    • Sun damage to an exterior paint finish

    • Physical damage to a lunar land rover

    • Termite damage to a home

    Correct Answer
    A. Explosion of an industrial factory steam boiler
    Explanation
    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.

    Rate this question:

  • 11. 

    Insurance is not a:

    • Business, including various operations that must be conducted in a way to generate income.

    • Contract, between the insured and the insurer

    • Barter, between the insured and insurer

    • Transfer system, in which insured transfers the chance of financial loss to insurer

    Correct Answer
    A. Barter, between the insured and insurer
    Explanation
    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.

    Rate this question:

  • 12. 

    Government insurance programs exist because 

    • The government has expertise in handling insurance claims.

    • The government has the necessary financial resources.

    • The government has infrastructure and staff to provide insurance.

    • The government has legal representatives in every state of the union.

    Correct Answer
    A. The government has the necessary financial resources.
    Explanation
    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.

    Rate this question:

  • 13. 

    The possibility of Chuck's house being damaged by fire is

    • A property loss exposure relating to real property.

    • A property loss exposure relating to personal property.

    • A noninsurable loss exposure.

    • A commercial loss exposure.

    Correct Answer
    A. A property loss exposure relating to real property.
    Explanation
    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.

    Rate this question:

  • 14. 

    All of the following statements regarding loss exposures are true, EXCEPT: 

    • There would be no need to transfer the costs of losses if there were no exposures to loss.

    • For a loss exposure to exist, there must be the possibility of a loss.

    • It is necessary for a loss to occur for a loss exposure to exist.

    • Every home has a fire loss exposure.

    Correct Answer
    A. It is necessary for a loss to occur for a loss exposure to exist.
    Explanation
    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.

    Rate this question:

  • 15. 

    John has worked for Alloto, Inc. for 25 years and is considering retiring within the next two years.  John's retirement is an example of

    • A personnel loss exposure for Alloto, Inc.

    • A human loss exposure for Alloto, Inc.

    • A liability loss exposure for Alloto, Inc.

    • A loss transfer loss exposure for Alloto, Inc.

    Correct Answer
    A. A personnel loss exposure for Alloto, Inc.
    Explanation
    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.

    Rate this question:

Quiz Review Timeline (Updated): Sep 3, 2023 +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Sep 03, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Jul 20, 2012
    Quiz Created by
    Vsgurunath
Back to Top Back to top
Advertisement
×

Wait!
Here's an interesting quiz for you.

We have other quizzes matching your interest.