Intro to Risk Management * U10 Textbook Ch21

_ is the chance of financial loss caused by perils to a person or property. Risk Insurance Indemnification Insurable interest Examples of _ to people are accidents and declining health. Indemnification Insurable interest Probability Perils _ create or increase the likelihood of a loss. Indemnification Hazards Risk management plan Insurance Fill-in-the-blanks below by clicking each blank and selecting the appropriate answer from the dropdown Word bank. In an insurance contract or policy, the insurer agrees to assume an identified risk in exchange for a permium paid by the insured. Fill-in-the-blanks below by clicking each blank and selecting the appropriate answer from the dropdown Word bank. Insurance provides relief from fear of severe financial losses due to events beyond the insured's control. For example, in Georgia, all automobiles on the road must have liability auto insurance coverage. If Nancy hits another car, causing $12,000 in property damages, Nancy's insurer (liability auto coverage) will pay for some or all of the other driver's property damages and bodily injuries. Fill-in-the-blanks below by clicking each blank and selecting the appropriate answer from the dropdown Word bank. Insurance works because it spreads individual risks among a large group of people to make losses and premiums more affordable for all. To earn a profit, insurance companies (insurers) must pay LESS in claims (losses) and operating expenses than it collects in _. Premiums Deductibles claims copays Insurance is meant to _ insureds by compensating them for ACTUAL losses. Enrich Indemnify A machine malfunctioned at work and broke Sarah’s arm, causing $6,900 in bodily injuries. Sarah filed a worker’s compensation ( a type of insurance) claim and received money to cover her losses.In this example, the worker's compensation insurer indemnified Sarah by _. Firing Sarah Injuring Sarah Paying Sarah's medical expenses Collecting a deductible from Sarah A machine malfunctioned at work and broke Sarah’s arm causing $6,900 in bodily injuries. Sarah filed a worker’s compensation ( a type of insurance) claim and received money to cover her losses.In this example, what are Sarah's losses? Sarah broke the machine and used her paycheck to repair it Sarah lost her job Sarah's worker's compensation insurance Sarah's bodily injuries and $6,900 medical expenses _ help insurers set premiums based on statistical probability and historical data (estimate the likelihood or probability of potential losses). Insurer agents Insurance companies Actuaries Insureds Insurance premiums are higher if the probability of loss is _. Higher Lower The probability of a teen causing an auto accident is _ than a person age 28, so insurance premiums for teens are more expensive. Higher Lower Health insurance premiums are _ expensive for non-smokers than smokers because the probability of loss for non-smokers is lower. More Less _ risk is insurable as long as there is “insurable interest.” Pure Speculative Joe, a business owner, _ have an insurable interest in his employees, so Joe cannot own life insurance policies on his employees. does does not Carol, Heidi’s mother, _ an insurable interest in Heidi who is 17, so Heidi may be added to Carol's health insurance policy. has does not have TRUE or FALSE. “Insurable risk” means that the risk must have the potential to result in serious financial loss NOT under the control of the insured. True False TRUE or FALSE You should purchase insurance for all risks associated with you and your family? True False _ insurance will cover burial expenses and other losses related to the death of a loved one. Life Health Vision Dental If you are "at-fault" in an accident, _ insurance will cover the other person's losses including property damages and bodily injuries. Life Health Disability Liability Sarah purchased insurance for her new home from Geico for $62 a month. Her home was struck by lightning, causing a fire that resulted in $12,000 of damages to her bedroom furniture and clothing. Sarah had to pay $1,500 of the claim, and Progressive paid for the remainder of the damages.Identity the insurer (insurance company). Sarah Progressive $62 $12,000 Homeowner's insurance Sarah purchased insurance for her new home from Geico for $62 a month. Her home was struck by lightning, causing a fire resulting in $12,000 in damages to her bedroom furniture and clothing. Sarah had to pay $1,500 of the claim, and the Geico paid for the remainder of the damages.Identify the insured (policyholder). Sarah Geico $62 $12,000 Homeowner's insurance Sarah purchased insurance for her new home from Geico for $62 a month. Her home was struck by lightning, causing a fire resulting in $12,000 in damages to her bedroom furniture and clothing. Sarah had to pay $1,500 of the claim, and the Geico paid for the remainder of the damages.Idenfity the peril. Sarah Geico Fire Personal property The house Sarah purchased insurance for her new home from Geico for $62 a month. Her home was struck by lightning, causing a fire resulting in $12,000 in damages to her bedroom furniture and clothing. Sarah had to pay $1,500 of the claim, and the Geico paid for the remainder of the damages.Identify the deductible. Sarah Geico $62 $1,500 $10,500 $12,000 Sarah purchased insurance for her new home from Geico for $62 a month. Her home was struck by lightning, causing a fire resulting in $12,000 in damages to her bedroom furniture and clothing. Sarah had to pay $1,500 of the claim, and the Geico paid for the remainder of the damages.Identify the amount the insurer will pay to indemnify Sarah. Sarah Geico $62 $1,500 $10,500 $12,000 Sarah purchased insurance for her new home from Geico for $62 a month. Her home was struck by lightning, causing a fire resulting in $12,000 in damages to her bedroom furniture and clothing. Sarah had to pay $1,500 of the claim, and the Geico paid for the remainder of the damages.Identify the premium. Sarah Geico $62 $1,500 $10,500 $12,000 Which of the following will INCREASE premiums. Pay premium annually instead of monthly Increase deductibles No tickets or citations Add coverage Bundle or buy multiple insurance policies with one insurer Multiple correct answers: Which of the following will DECREASE premiums? (Choose all CORRECT answers.) Reduce coverage Increase deductibles Purchase group insurance Pay premium monthly