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WorksheetsIBT Pre-Assessment #1
Total questions: 20
Worksheet time: 10mins
Suppose that early this year you buy a home valued at 180,000andpurchase 200,000 worth of fire insurance on it. According to the principle of indemnity, what amount of money would the insurer pay you if the home were totally destroyed by fire?
$90,000
$100,000
$180,000
$200,000
$380,000
A music storeowner is considering expanding the offerings of her business (which currently only includes instrument and sheet music sales) to include instrument rental. What type of risk would accompany the possibility of earning a profit from this extension of the business?
Pure
Managed
Insured
Speculative
Uninsurable
The City of Minneapolis uses self-insurance to protect itself from the risk of liability and other types of lawsuits. Why would the city use self-insurance?
To eliminate the risk
To provide a means for covering losses
To create high insurance costs
To develop a new policy to be purchased by the insured
To shift the risk to someone else
What is the purpose of business liability coverage?
Protect the business from losses due to damage to the property of another person by the insured’s vehicle
Protect the business from embezzlement by an employee
Protect the business from damage due to fire or flood
Protect the business from losses due to negligence by a public employee
Protect the business from losses due to injury to another person or another person’s property
Mark’s company provides life insurance as a benefit to its management employees. Upon receiving the paperwork for his life insurance policy, Mark specifies that he would like the proceeds from the policy be given to his wife should he die during the period of the policy. Which of the following would Mark’s wife be in this case?
Beneficiary
Recipient
Survivor
Actuary
Designee
What is the purpose for individuals or organizations purchasing and using safety equipment?
Risk avoidance
Shifting the risk
Risk reduction
Risk assumption
Eliminating the risk
What is the purpose of no-fault insurance?
Provides insurance for all vehicles registered in the state
Reduces court case loads and premium costs
Eliminates finger-pointing for auto accident claims
Limits the rights of insured individuals
Limits losses caused by damage to an insured vehicle due to fire, theft, hail, dust storm, or vandalism
Deja Rimes, owner of Deja Vu Music Supplies, Inc., has had her business up and running for just nine months. A large fire a few blocks away destroyed two small businesses and has made Deja more concerned about the risk for her own business. Deja’s inventory of musical instruments, sheet music, and tools for repairing instruments could all be destroyed if a similar disaster were to occur in her own business. Due to Deja’s reliance on the income that the shop generates and the risk associated with potential disaster, she has contacted Bill Ferrell, an insurance agent, about insuring Deja Vu Music Supplies from a disaster such as fire. What type of risk would Deja suffer if her business caught fire?
Pure
Managed
Speculative
Shifted
Uninsurable
Which of the following is not an insurable loss?
A loss due to a windstorm
A loss of a key executive
A loss due to an earthquake
A measurable loss of property
An undeterminable or unpredictable loss
What type of risk is uninsurable?
Health
Avoidable
Pure
Financial
Speculative
Javier is just starting to work in the finance department of a large manufacturing company. As part of his onboarding process, he’s currently in training about expenses associated with employees. He is surprised to learn that ________ are/is responsible for paying the premiums for unemployment insurance coverage that covers eligible unemployed workers.
the federal government
state governments
employees
employers
both federal and state governments
Which of the following is not a risk management technique?
Assuming
Avoiding
Ignoring
Shifting
Reducing
Alina purchased a standard fire insurance policy with an endorsement for extended coverage. She incurred damage due to nuclear radiation and filed a claim with her insurance company. Why would her insurance company refuse to cover her claim?
Normally, insurance companies are skeptical about taking such claims.
Losses caused by nuclear radiation usually are excluded from extended-coverage endorsements.
Payments to her would bankrupt the company.
Insurance companies are slow to respond to policyholders’ claims.
It violates the principle of indemnity.
Which of the following is not a type of insurance that is available through either federal or state governments?
Disability
Retirement
Liability
Medicare
Survivor
Luis has a store in a building that is valued at approximately 750,000,butthinkingthatfireorothercatastrophesrarelydamageallofabuilding,decidestoinsurethebuildingfor 500,000. However, Luis overlooked his policy’s 80 percent coinsurance clause. Within a few months, a fire breaks out. Fortunately, the fire occurred after hours and no one was hurt, but the fire department declares the building a total loss. What is the maximum amount that Luis’s insurance company will reimburse him for the loss given that he underinsured the building?
$1,000,000
$500,000
$400,000
$625,000
750,000
What is the name given to the fee charged by an insurance company to cover a business for possible loss due to fire?
Premium
Indemnity
Policy
Dividends
Self-insurance
Which of the following is an insurance plan that directly employs or contracts with selected physicians and hospitals to provide health care services in exchange for a fixed, prepaid monthly premium?
Health Maintenance Organization
Preferred Provider Organization
The Affordable Care Act
Major medical insurance
Workers’ compensation insurance
What is the name given to the process of evaluating risks and minimizing the costs associated with those risks?
Financial management
Risk management
Management planning
Loss prevention
Risk reduction
Which of the following businesses is most likely to purchase a fidelity bond?
A law office that only receives payments by credit card
A doctor’s office that only receives payments through insurance companies
A manufacturing firm with overseas customers
A seller at farmer’s markets who operates his or her business alone
A bank that receives cash and checks
What is another name for whole life insurance?
Term life insurance
Indemnity life insurance
Straight life insurance
Ordinary life insurance
Endowment life insurance
