Real Estate > QUESTION PAPER & MARK SCHEME > State Farm 2023 Questions And Verified Answers (All)
State Farm Pure risk ANSWER- Financial loss is the only possible outcome, no chance for financial gain (ex: accidents, sickness, fire, disabilities) Speculative Risk ANSWER- Where there is an ou... tcome for either financial gain or none (ex: gambling, stock market, real estate) Morale Hazards ANSWER- Refer to the insureds state of mind, usually lapses in judgement are occurring so remember lots of E's in carelessness, indifference, and imprudence (ex: speeding to get home to watch a TV show) Moral Hazards ANSWER- When an insured is dishonest and has little regard toward future responsibilities (ex: lying, fraudulent claims, smoking, drug addiction) Peril's? ANSWER- The cost of lost listed within a policy for which the insurer will provide protection against. (Ex: life and health insurance protects against medical expense, death, loss of income while homeowners insurance will protect against FIRE, WIND, HAIL Where can Peril's on your test be found? ANSWER- They can be found in the Insurance clause also known as the Insurance agreement. Let's talk about LOSS when it comes to insurance? ANSWER- An insurer will pay out a claim only if it results in a loss to the insured. Such as rain may create hazardous road conditions but there was no loss to the insured. Fire is a peril listed in the policy, however if there was no damage to anything, no loss, no claim to be paid. Exposure is what? ANSWER- Exposure is a method of measurement that defines how prone a risk is to loss. (Ex: age, sex, occupation, advocates, medical history, can all be units of exposure) IMPORTANT —> a male firefighter is more exposed to death than a female firefighter because on average males die earlier. Methods of handling Risk ANSWER- Avoidance, Retention (when the insured retains a portion of the risk themselves, this encourages safe practices to lower losses) an example would be a DEDUCTIBLE) sharing (splitting up into many so total loss doesn't occur), Reduction (lowers the chance of loss through maintenance of either property or body. (Working out and eating healthy reduces the chance of heart disease) TRANSFER (insurance is the transfer of financial risk, instead of the insured taking full responsibility for their losses; they transfer a financial risk to an insurer) [Show More]
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