CONCEPT OF RISK AND PERIL

What is the fundamental difference between risks and perils in insurance?

• A) Risks are specific events; perils refer to potential harm.

• B) Risks refer to potential harm; perils are uncertainties.

• C) There is no difference; the terms are interchangeable.

• D) Risks involve financial loss; perils involve physical harm.

In insurance, what is a peril?

• A) The likelihood of loss

• B) The financial burden

• C) The specific cause of harm

• D) The policyholder's responsibility

What category of risk involves both the possibility of gain and loss?

• A) Pure Risk

• B) Dynamic Risk

• C) Particular Risk

• D) Speculative Risk

Which type of risk affects the entire economy or large segments of it?

• A) Dynamic Risk

• B) Particular Risk

• C) Fundamental Risk

• D) Speculative Risk

What does insurable risk typically refer to?

• A) Pure Risk

• B) Dynamic Risk

• C) Speculative Risk

• D) Fundamental Risk

What type of risk involves changes over time and may not be easily insurable?

• A) Dynamic Risk

• B) Static Risk

• C) Speculative Risk

• D) Particular Risk

In insurance, what does a policyholder transfer to the insurance company by paying premiums?

• A) Risks

• B) Perils

• C) Liabilities

• D) Assets

What is a characteristic of static risks?

• A) Changes over time

• B) Remains constant over time

• C) Involves gains and losses

• D) Affects only specific individuals

What is the primary focus of assessing risks and perils in insurance?

• A) Maximizing premiums

• B) Minimizing losses

• C) Eliminating uncertainties

• - D) Achieving market dominance

Which risk category involves events that cause harm with no opportunity for gain?

• A) Pure Risk

• B) Speculative Risk

• C) Particular Risk

• D) Dynamic Risk