Q&A Hero

Q: Land and anything physically attached to the land, such as buildings

Q: Financing loss intentionally through a firms cash flows

Q: Buying insurance or making contractual arrangements that transfer risk to others

Q: Wrongful acts or omissions for which an injured party can take legal action against the wrongdoer for monetary damages

Q: Making funds available to cover losses that cannot be eliminated by risk control

Q: Ways of coping with risk that are designed to preserve the assets and earning power of a firm

Q: Coverage that designates part of a firms earnings as a cushion against possible future losses

Q: Coverage that provides benefits upon the disability of a firms partner or other key employee

Q: Any property other than land and anything physically attached to the land, such as buildings

Q: A managed-care network providing health insurance that is more expensive but offers a broader choice of medical providers Matchteh term with its definition. Some terms may not be used. a. Disability insurance b. Personal property c. Proximate cause d. Real property e. Risk control f. Risk financing g. Risk management h. Risk retention i. Risk transfer j. Self-insurance k. Torts

Q: Compensatory damages that relate to economic loss, such as medical expenses and loss of income

Q: Stating in a property insurance policy that all direct damages are covered except those caused by perils specifically excluded

Q: The uncertainty associated with an investment decision

Q: Economic or non-economic damages intended to make the claimant whole by compensating the claimant for any injuries or loss arising from the negligent action

Q: The uncertainty associated with a situation where only loss or no loss can occur

Q: Identifying the specific perils covered in a property insurance policy

Q: The possiblity of losses associated with the assets and earnings potential of a firm

Q: A cause of loss, either through natural events or through the actions of people

Q: A managed-care network providing health insurance that is less expensive but more limiting in choices of medical providers

Q: Coverage primarily against employee dishonesty Match the term with its definition. Some terms may not be used. a. All-risk approach b. Business risk c. Compensatory damages d. Disability insurance e. Economic damages f. Health maintenance organization g. Market risk h. Named-peril approach i. Peril j. Preferred provider organization k. Pure risk

Q: A defect resulting from a problem that occurs during the manufacturing process, causing the product to subsequently not be made according to specifications

Q: Compensatory damages for such losses as pain and suffering, mental anguish, and loss of physical abilities

Q: Laws that obligate an employer to pay employees for injury or illness related to employment, regardless of fault

Q: A program that designates part of a firms earnings to fund a portion of employee medical coverage

Q: A form of punishment beyond compensatory damages that intends to punish wrongdoers for gross negligence or callous disregard and to have a deterrent effect.

Q: A defect resulting from a dangerous design, even though the product was made according to specifications

Q: Coverage designed to provide liability and physical damage protection for a vehicle

Q: A defect resulting from failure to convey to the user that hazards are associated with a product or to provide adequate instructions on safe product use

Q: A provision in a property insurance policy that requires the owner to have insurance for at least 80 percent of what it would cost to rebuild the building or replace the personal property

Q: Insurance that provides a healthy partner the cash to buy out a partner who becomes ill Match the term with its definition. Some terms may not be used. a. Automobile insurance b. Coinsurance clause c. Crime insurance d. Design defect e. Manufacturing defect f. Marketing defect g. Noneconomic damages h. Partially self-funded program i. Proximate cause j. Punitive damages k. Workers compensation legislation

Q: The cost of replacing personal property and rebuilding real property at todays prices

Q: Choosing not to engage in hazardous activities

Q: A comprehensive limit on annual expenses should a number of employees reach the firms per-employee limit on self-funding for medical claims

Q: A firms per-employee limit on self-funding for medical claims

Q: Keeping a loss from happening

Q: An insurance term that refers to the depreciated value of property

Q: A loss arising from an inability to carry on normal operations due to a direct loss of property

Q: Lessening the frequency, severity, or unpredictability of potential losses

Q: A loss in which physical damage to property reduces its value to the property owner

Q: Coverage that provides benefits to employees injured at work Match the term with its definition. Some terms may not be used. a. Actual cash value b. Aggregate stop loss limit c. Direct loss d. Disability buyout insurance e. Disability insurance f. Indirect loss g. Loss avoidance h. Loss prevention i. Loss reduction j. Replacement value of property k. Specific stop loss limit

Q: Coverage that reimburses a business for the loss of anticipated income following the interruption of business operations

Q: Coverage that provides benefits to a firm upon the death of key personnel

Q: Risks that directly affect individual employees but may have an indirect impact on a business as well

Q: A business version of a homeowners policy designed to meet the property and general liability insurance needs of some small business owners

Q: The typical standard of care, based on what a reasonable or prudent person would have done under similar circumstances

Q: The criminal transfer of funds from a bank account

Q: A policy for small businesses that do not qualify for a BOP that combines property insurance, commercial general lability insurance, and crime insurance

Q: Coverage for general liability loss exposure

Q: A negligent act that is the clear cause of damages sustained

Q: Risk is a. a chance all entrepreneurs take. b. a probability that adverse conditions will result. c. a possibility of suffering harm or loss. d. usually avoidable. Match the term with its definition. Some terms may not be used. a. Business interruption insurance b. Business owners policy c. Commercial general liability insurance d. Disability insurance e. Funds transfer fraud f. Key-person life insurance g. Package policy h. Personnel risks i. Proximate cause j. Reasonable standard k. Workers compensation insurance

Q: Pure risk is a. a chance all entrepreneurs take. b. a condition in which there is a possibility that an adverse deviation from a desired outcome will occur. c. a probability that adverse conditions will result. d. the uncertainty associated with a situation where only loss or no loss can occur.

Q: When considering the feasibility and affordability of insuring small potential losses, which company program will impact this decision? a. ACV b. FICA c. Self-insurance d. Workers compensation

Q: Which action is part of the second step of a risk management program analysis? a. Identify and understand risks. b. Evaluate the potential severity of risks. c. Select method to manage risks. d. Implement the decision.

Q: Business interruption insurance is a. included in a PPO policy. b. may be part of an umbrella liability policy. c. not recognized as important by small business owners. d. part of a CGL no fault coverage plan.

Q: Which risk type directly affects the employee but indirectly impact the business? a. Liability b. Personnnel c. Property d. Pure

Q: Self-insurance requires a. an analysis for stop loss limits. b. implementing risk control methods. c. owning stock in an insurance company. d. saving money to cover possible future losses.

Q: Typically, insurance premiums to cover employee lawsuits start at a. $2,500. b. $7,500. c. $15,000. d. The amount differs from the above values.

Q: Mistakes that an employee makes in assembling a product for a customer could be a(n) a. employee liability. b. operations liability. c. premises liability. d. product liability.

Q: Damage to a building by flooding is an example of a. a benign neglect loss. b. a direct loss. c. a tort-based liability claim. d. a depreciated cash value loss.

Q: Crime insurance is most critical for a small business when a. the business has financial controls. b. the firm is struggling. c. the owner has a personal distraction. d. the owner employs family members.

Q: For a person to be found guilty of a negligent act, the negligent act must be the ____ cause of the loss in a tort liability claim. a. assumed b. compensatory c. proximate d. statutory

Q: Disability buyout insurance a. is common in small firms that are single owner operations. b. protects the firm from losses due to the death of a key employee. c. provides money to buy out a partner. d. replaces revenue lost when a key employee is disabled.

Q: A carton of eggs broke onto the floor in the dairy section, making the floor slippery. Little Johnny slipped, fell, and hit his head on the floor, causing a cut and mild concussion. The grocery store incurs _________________ liability for his injuries. a. premises b. operational c. professional d. product

Q: A defect resulting from failure to convey to the user that hazards are associated with a product or to provide adequate instructions on safe product use is known as a(n) a. marketing defect. b. manufacturing defect. c. design defect. d. engineering defect.

Q: Review and evaluate is an important step in the risk management process because a. conditions change and mistakes may be identified. b. it is nearly impossible to evaluate risk effectively. c. of the challenges in identifying small business risks. d. of the difficulty in selecting effective methods.

Q: A prudent person is also known as: a. a tort. b. the reasonable standard. c. indemnification. d. a personnel risk.

Q: A delivery truck owned by Martins Lumber backed into a car owned by Bonnie. Bonnie asked Martins Lumber to pay for the repairs to her car. Bonnie is asking for: a. exemplary damages. b. non-economic damages. c. compensatory damages. d. punitive damages.

Q: Requiring all servers in a restaurant to know how to properly lift heavy objects is an example of loss a. avoidance. b. control. c. prevention. d. reduction.

Q: A contractual clause that requires one party to assume the financial consequences of another partys legal liabilities is called a a. workers compensation clause. b. extra clause. c. indemnification clause. d. tort.

Q: A customers slip and fall injury would be covered by a. commercial general liability insurance. b. surety bonds. c. business interruption insurance. d. commercial property coverage.

Q: Morton is discussing with his insurance agent the possibility that he might lose his building and equipment in the event of a fire or windstorm. Should that happen, Mortons company would not be able to earn revenues. These two people are discussing a. risk. b. pure risk. c. business risk. d. market risk.

Q: Brenda expects there will be uncertainty regarding the outcome of her business decisions. The final result of those decisions will not be known until she has identified the investment opportunity, developed strategies, and __________ to her business. a. secured financing b. purchased inventory c. committed resources d. performed market research

Q: A small business customer slips on a wet floor (due to a slow water leak), falls and breaks an arm. Damages that could potentially be awarded to the customer might include: a. economic since the customer has a loss of physical abilities. b. noneconomic since the customer has medical bills. c. punitive due to the leak. d. compensatory to cover the cost of repairing the leak.

Q: Assume that the physical property of a business is valued at $50,000. The companys commercial property policy contains a coinsurance clause with a stated percentage of 80 percent. The company insures the property for $30,000 (75 percent of the specified minimum). The company incurs a fire loss of $20,000. How much of the loss will the insurance company pay for? a. $0 b. $15,000 c. $20,000 d. $10,000

Q: Patrick has a great idea for a new business venture. Even after conducting research he is not certain whether he can make a go of it. Patrick is concerned about: a. risk. b. pure risk. c. business risk. d. market risk.

Q: Perrys business is not in the safest neighborhood. He is concerned about robbery and vandalism, two types of: a. business risk. b. market risk. c. pure risk. d. uninsurable risk.

Q: To evaluate an insurance program, which question should be answered first? a. How much coverage is adequate? b. What kinds of risk can be covered by insurance? c. What types of coverage should be purchased? d. What pricing is available?

Q: Driving as safely as possible is an example of loss a. avoidance. b. control. c. prevention. d. reduction.

Q: A policy for small businesses that do not qualify for a BOP that combines property insurance and commercial general liability insurance is called a a. personal policy. b. package policy. c. health policy. d. business owners policy.

Q: A managed-care network providing health insurance that is more expensive than an HMO but offers a broader choice of medical providers is called a a. key-person organization. b. package policy. c. personal maintenance organization. d. preferred provider organization.