Risk Management and Insurance Principles Quiz

Risk management involves identifying, assessing, and prioritizing risks.

Self-insurance is a common method of risk retention.

The primary purpose of insurance is to provide financial protection against unforeseen events.

Investment insurance is not a common type of insurance.

An insurance premium is the amount of money paid by the insured to the insurer for coverage.

A deductible in insurance reduces the insured's financial responsibility.

Adverse selection refers to the tendency for higher-risk individuals to seek insurance coverage.

Indemnity principle in insurance ensures that the insured does not profit from the insurance policy.

Moral hazard in insurance refers to the risk that the insured may change their behavior once insured.

Reinsurance is insurance purchased by insurance companies to protect against excessive losses.

Risk pooling in insurance is the process of spreading risk among a group of insured individuals.

A peril in insurance terminology is the cause of a loss covered by the insurance policy.

Risk transfer involves transferring the risk to a third party, usually an insurance company.

Risk reduction is a risk management strategy focused on reducing the frequency or severity of losses.

Automobile insurance is an example of property and casualty insurance.

A characteristic of a reinsurance agreement is that it transfers risk from the insurer to another insurer.