General Insurance
A business installs sprinklers throughout its warehouse. Which method of handling risk is that?
Answer and explanation
Answer: A. Reduction lowers the frequency or severity of loss without removing the risk, which is what sprinklers do. Avoidance means not undertaking the activity at all, retention means bearing the loss oneself, and transfer moves the financial consequence to another party, most often by an insurance contract.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, methods of handling risk
More general insurance questions
- An insurer transfers part of the risk it has accepted to another insurer. What is that arrangement?
- An owner wishes to transfer a life policy to another person. Why does the personal contract character of insurance matter here?
- How do stock and mutual insurance companies differ in ownership and distributions?
- How does a warranty differ from a representation in insurance law?
- How does the principle of indemnity apply differently to life insurance than to property insurance?
- In the law of agency as it applies to insurance, who is the principal?
621 New York questions like this one.
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