Question | Answer |
Liability insurance | Covers if someone else is liable for wrecking you |
5 steps of risk management process | (1) Identify your risk exposure
(2) Evaluate your potential losses
(3) Choose the most appropriate risk management tool
(4) Implement risk management plan
(5) Periodically re-evaluate your plan |
Why pay for life insurance in older adulthood? | Burial costs |
What should I look out for renter's insurance? | Ask for replacement cost, not fair market price |
Rider on policy | Any insurance above and beyond what is already covered in generalized insurance plan |
Rider on policy | Any insurance above and beyond what is already covered in generalized insurance plan |
Rider on policy | Any insurance above and beyond what is already covered in generalized insurance plan |
Is theft small risk or large risk? | Small |
Is auto accident small or large risk? | Large |
Law of large numbers | as size of pool of identical risk gets larger, the expected loss gets more predictable |
Insurers create risk pools of many individuals. If someone has no loss or claim, could they still pay more? | Yes. |
Insurers create risk pools of many individuals. If someone has no loss or claim, could they still pay more? | Yes. |
Who pays if losses exceed total premiums collected? | Insurance company |
Who pays if losses exceed total premiums collected? | Insurance company |
What are 3 problems with small pools? | 1. Chance of exceeding the dollars in the pool
2. Hard to get pool members to pay extra later
3. Pools likely to have correlated risks. |
What are 3 problems with small pools? | 1. Chance of exceeding the dollars in the pool
2. Hard to get pool members to pay extra later
3. Pools likely to have correlated risks. |
Nonrandom risks | intentional acts (war, suicide) |
Nonrandom risks | intentional acts (war, suicide) |
Unpredictable risks | risk such as environmental damage and medical malpractice |
Unpredictable risks | risk such as environmental damage and medical malpractice |
Unpredictable risks | risk such as environmental damage and medical malpractice |