Understanding Insurance Policies and Risk Management


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question 1 of 3

How does insurance allow a person or business to manage risk?

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1. How is the Indemnity principle different from the Subrogation rights?

2. Mary is in a car accident, and her car is completely destroyed. Her policy limit for damage to the car is $35,000. Her deductible is $1,000. The value of the car is $28,000. The insurance company is required to pay which amount?

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About This Quiz & Worksheet

This quiz and corresponding worksheet will help you gauge your knowledge of insurance policies and risk management. Topics you'll need to know to pass the quiz include the provisions typically included in an insurance policy and how insurance allows a person or business to manage risk.

Quiz & Worksheet Goals

Use this printable worksheet and quiz to review:

  • How insurance allows a business to manage risk
  • Provisions typically included in an insurance policy
  • The law of large numbers
  • How insurance companies recover their damages

Skills Practiced

This worksheet and quiz will let you practice the following skills:

  • Interpreting information - verify you understand subrogation rights and how that applies to an individual
  • Information recall - access the knowledge you've gained regarding the provisions of an insurance policy
  • Reading comprehension - ensure that you draw the most important information from the related risk management lesson

Additional Learning

To learn more about insurance and risk management, review the corresponding lesson called Understanding Insurance Policies and Risk Management. This lesson will help you:

  • Understand what risk management is
  • Describe how risk can be transferred in an insurance policy
  • Identify the roles of premiums and deductibles in an insurance policy
  • Explain how companies decide to grant policies
  • Appreciate how insurance companies determine payout