FREE RIBO Insurance Fundamentals Test 3

Question 1

Ben purchased fire insurance on his antique desk.
While the desk was being moved, it was damaged.
As "damage in transit" was not an insured peril, Ben set fire to the damaged desk.
The desk was completely destroyed and Ben collected the insured value of the desk from his fire insurer.
This scenario illustrates:

Accepted Answer

moral hazard

Answer

subjective probability

Answer

speculative risk

Answer

attitudinal hazard

Question 2

Which statement is true with regard to risk and insurance?
I. Most speculative risk can be insured.
II. Insurance is a form of risk transfer.

Accepted Answer

II only

Answer

I only

Answer

both I and II

Answer

neither I nor II

Question 3

The probability of drawing an "ace" from a thoroughly shuffled deck of playing cards is one-thirteenth. This type of probability is known as:

Accepted Answer

objective probability

Answer

subjective probability

Answer

objective risk

Answer

chance of loss

Question 4

When an earthquake occurred in California, a studio was filming a number of movies. In addition to the physical damage the studio sustained, the studio was forced to delay or cancel release of some films. The profits lost because of delay or cancellation illustrated:

Accepted Answer

consequential loss

Answer

direct loss

Answer

subjective probability

Answer

objective probability

Question 5

Beth was late for work. As she drove around a curve, she hit a patch of oil that had been spilled on the road. She slid across the road and hit a guard rail. Beth was not hurt; however, her car was severely damaged. The presence of oil on the road is best described as a:

Accepted Answer

physical hazard

Answer

attitudinal hazard

Answer

objective risk

Answer

moral hazard

Question 6

Which of the following is NOT an identified type of insurance?

Accepted Answer

Education

Answer

Property

Answer

Auto mobile

Answer

Health

Question 7

Homeowner's Insurance covers all EXCEPT?

Accepted Answer

Party coverage

Answer

Theft and Vandalism coverage

Answer

Hurricane coverage

Answer

Liability coverage

Question 8

It is better to need and not have insurance !

Accepted Answer

FALSE

Answer

TRUE

Question 9

To drive a vehicle in the state of Virginia, you MUST have of which of the following types of insurance?

Accepted Answer

Liability

Answer

Comprehensive

Answer

Collision

Answer

Uninsured Motorist

Question 10

For automobile insurance...you pay all EXCEPT which of the following

Accepted Answer

State inspection cost

Answer

Deductible cost

Answer

Premium cost

Answer

Extended cost