9 Questions
What is the primary function of insurance in relation to perils?
To reduce the financial loss on the owner or beneficiary of the asset
What is the correct classification of the risk of a flood?
Pure risk
What is the main difference between a peril and a hazard?
A peril is an event that may cause a loss, while a hazard is a condition that increases the chances of loss
What is an example of a physical hazard?
A building located in a flood-prone area
What is the primary goal of loss reduction techniques?
To minimize the impact of a loss
What is the term for the uncertainty of outcome?
Risk
What is the correct classification of the risk of a landslide?
Catastrophic risk
What is the term for the costs of repair, replacement, or reinstatement and consequential losses until repair, replacement, or reinstatement?
Actual loss
What is the correct way of managing risks?
Prevention, reduction, retention, and transfer
Test your understanding of perils and risks in the context of insurance. Learn how to distinguish between these two concepts and how they impact financial losses. Explore examples of perils and understand how insurance works to reduce losses.
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