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Exam 24: Managing Risk

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Question 41

True/False

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Workers' compensation insurance is required in all states except Louisian A.

A) True
B) False

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Question 42

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The premium charged for workers' compensation insurance is the same for all workers,regardless of their occupation.

A) True
B) False

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Question 43

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Self-insurance makes more sense for firms that operate one large facility than it does for firms with facilities scattered all over the country.

Fairweather Farms is located on Florida's Gulf Coast and is primarily engaged in raising and harvesting citrus fruit.The owners of Fairweather Farms are correct in beginning to think about how the risk of climate change might impact their crops in the future.

Which of the following statements best reflects the concept behind the rule of indemnity?

Self-insurance is the practice of setting aside money to cover routine claims and buying only "catastrophe" policies to cover big losses.

Waata carries health insurance for his family and his staff and their families.While it is a bit more expensive,the policy allows everyone to choose their own doctor.Further,members of the plan have to pay a deductible each year before the insurance will pay any bills.Waata and his staff and families have health insurance with an) :

________ risk involves a chance of either profit or loss.

Water sprinklers and smoke detectors can be used to minimize speculative risks.

An enterprise risk management ERM)program has a goal of defining which risks the program will manage.

One of Waata's staff members had been out on sick leave because she had an emergency appendectomy.She brought the hospital bills in to Waata for his opinion.It seems she had been covered by two health insurance policies for some time and now she thinks she may be able to collect from both companies in payment for the operation.Watta assured his employee that:

An insurance premium is the fee charged by the insurance company in return for their promise to pay for all or part of a loss.

Proctor & Gamble Inc.is ready to launch a new shampoo in the marketplace.They will incur a speculative risk.

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?

Constitutional Corporation is a mutual insurance company.The company has had a good year,with the amount of premiums exceeding the amount of claims by a significant amount.This is likely to result in an) :

An uninsurable risk is one that no insurance company will cover.

Hap has health coverage through a Health Maintenance Organization HMO).He is likely to be very pleased with the amount of flexibility he has to choose his doctor and his health care options.

According to the Law of Large Numbers,if 26 out of 100 homes are likely to sustain earthquake damage in a 30-year period of time in San Jose,California,and 12 out of 100 homes in the same location are likely to be damaged due to flooding during the same time period,the premium for earthquake coverage will be ____________.

The threat of lawsuits has caused some drug companies not to manufacture certain types of vaccines.What type of risk management option is being practiced?

A fidelity bond covers losses resulting from a second party's failure to fulfill a contract.