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55. Cary owns a life insurance policy on her husband Jay through Mutual of Cincinnati Life
Insurance Company. As a policyholder, she also owns part of the company.
56. Property insurance covers losses from fires, accidents, or theft.
57. Liability losses result from property damage or injuries suffered by others for which the
policyholder is held responsible.
58. One advantage of health savings accounts is that healthy people can use tax-deferred
money to save for their future medical needs.
59. Health savings accounts are managed care plans that have a high deductible.
60. The chances of dying when young are much higher than the chances of becoming disabled
when young.
61. Disability insurance replaces part of your income if you become disabled and can no
longer work, but you usually must be disabled for a specified period of time before benefits are
provided.
62. Workers' compensation insurance guarantees payment of wages, medical care, and
rehabilitation services for employees who are injured on the job.
63. The premium charged for workers' compensation insurance is the same for all workers,
regardless of their occupation.
64. Workers' compensation insurance is required in all states except Louisiana.
65. Professional liability insurance is also sometimes known as malpractice insurance.
66. Product liability insurance covers liability arising out of defective products sold.
67. Firms can take out term life-insurance policies on their top executives.
68. Most homeowners' insurance policies automatically provide adequate coverage for small
home-based businesses.
69. An endorsement can provide additional coverage to a homeowner's policy for business
equipment.
70. A fidelity bond covers losses resulting from a second party's failure to fulfill a contract.
71. A surety bond protects employers from employee dishonesty.
72. Risk management is concerned only with risks to individuals and businesses.
73. Worldwide risks need to be prioritized so that international funds can be spent where they
can do the most good.
74. Risks such as global warming are the concern of businesses and governments primarily in
the U.S.
75. Harmon works on a highway construction crew and frequently handles explosives. His
friend Willie works as a bookkeeper for a retail store. The amount of workers' compensation
premiums paid by Harmon's employer will probably exceed the premiums paid by Willie's
employer.
76. It's good advice for doctors and lawyers to carry malpractice insurance.
77. Which of the following is a goal of enterprise risk management?
78. Risk management for business is critical due in part to:
79. Enterprise risk management is:
80. Risk management is:
81. Jonathon is in charge of risk management for Learnit Corp., a large chain of preschools in
the midwest. He has decided to build enterprise risk management into the organization. The first
step Jonathon should take is to:
82. ________ is a term that refers to the chance of loss, the degree of probability of loss, and
the amount of possible loss.
83. ________ risk involves a chance of either profit or loss.
84. ________ risk involves the threat of loss with no chance for profit.
85. Which type of risk management strategy is a company using when it installs mirrors and
surveillance cameras to spot and prevent shoplifting?
86. Some businesses will set aside money to cover routine losses and buy "catastrophe"
policies to cover big losses. This is an example of which of the following?
87. A firm that chooses to self-insure and cover losses out of its budget is said to:
88. An insurance company would not be willing to insure a risk if it:
89. A policyholder must have a(n) __________ in what is being insured, meaning that the
policyholder must be the one at risk to suffer an economic loss.
90. __________ is the armor individuals, businesses, and nonprofit organizations use to
protect themselves from various financial risks.
91. Organizations spend about __________ percent of gross domestic product on insurance
premiums.
92. Bill has decided to increase the size of his auto repair business, although he realizes that
this decision brings added risk. This is an example of ________ risk.
93. Alberto is worried about the risk of potential flooding to his restaurant. He decides to buy
insurance to cover this ________ risk.
94. In designing an addition to his successful nursing home, Steve realized that water
sprinklers and smoke detectors were now required by state regulations. His existing structure
already had sprinklers and detectors because he felt that this was an effective strategy to:
95. Firestone and Ford recalled thousands of tires when several people died in traffic
accidents blamed on faulty tires. This is an example of which of the following?
96. In an effort to minimize the cost of conventional property/casualty insurance, XYZ
Electronics decided to manage their risk by self-insuring. The most likely way XYZ would try to do
this would be to:
97. Sadly, during a war many civilians watch everything they have destroyed. Insurance
companies will view this type of loss as:
98. Abraham is excited about opening his car wash facility. The required investment of
money and time is sizable and although he has high hopes, Abraham is taking a speculative risk.
This means that:
99. Amusement parks often have a minimum height restriction on some of their most thrilling
rides. This risk management strategy is done in an effort to:
100. Harold owns several gas stations. He realizes that among the several risks associated
with this type of business is the risk of minor damage to cars from dirty or contaminated fuel. He
also knows that there is a small chance of a major loss if a fire occurred at one of his gas
stations. Harold wants to control his insurance costs while still maintaining a reasonable risk
management program. He is considering self-insurance. If he decides to use this approach, he
will probably:
