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© 2014 Pearson Canada Inc.#
Property insurance companies ____.
A) cover losses of real property
B) pay a sum of money if noncatastrophic events occur
C) provide income if a person dies, is incapacitated by illness, or retires
D) protect against legal liability exposures
Answer: A
Diff: 1 Type: MC Page Ref: 272
Skill: Recall
Objective List: 12.1 Identify the important aspects of the insurance industry
Casualty insurance companies ____.
A) cover losses of real property
B) pay a sum of money if noncatastrophic events occur
C) provide income if a person dies, is incapacitated by illness, or retires
D) protect against malpractice exposures
Answer: D
Diff: 1 Type: MC Page Ref: 273
Skill: Recall
Objective List: 12.1 Identify the important aspects of the insurance industry
Which of the following is likely to occur if lawsuits involving Property and Casualty
insurance and amounts awarded rise dramatically?
A) Insurance companies leave premiums unchanged
B) Insurance companies would raise premiums
C) Insurance companies hold less liquid assets to earn more income
D) Insurance companies keep insurance rates low
Answer: B
Diff: 2 Type: MC Page Ref: 272 - 273
Skill: Applied
Objective List: 12.1 Identify the important aspects of the insurance industry
Reinsurance ____.
A) allows the insured to reduce the premium by accepting a portion of the risk that would
otherwise be allocated to the insurance company
B) allows insurance companies to reduce their risks of exposure by allocating a portion of the
risk to another company in exchange for a portion of the premium
C) allows insurance companies to reduce their risks of exposure by allocating a portion of the
risk to the insured in exchange for a rebate on the premium
D) None of the above
Answer: B
Diff: 3 Type: MC Page Ref: 273
Skill: Recall
Objective List: 12.1 Identify the important aspects of the insurance industry