1. If a person is knowledgeable of the law of large numbers, she would conclude that it would indicate what should happen as an insurer experiences an increase in the number of units insured?
1. Underwriting expenses would decrease
2. The amount the insurer expects to pay in claims should decrease
3. Actual results will more closely approach expected result
4. The insurer's profitability should become more variable
2. Your long-time downtown insurance agent would inform you that unique exclusions are used in insurance policies for each of the following reasons except to:
1. reduce moral hazard.
2. waive policy conditions
3. eliminate coverage for uninsurable perils
4. eliminate coverage not needed by typical insureds.
3. In the realm of the insurance industry, casualty insurance coverage would apply to which of the following categories of insurability?
1. workers compensation insurance
2. fire insurance
3. marine insurance
4. life insurance
4. Ted’s Consignment was destroyed by a fire. The firm’s fixtures cost $1,200 when purchased, but similar new fixtures now costs $1,800. Assuming the fixtures were 50 percent depreciated, what is the actual cash value of Ted's loss?
1. $600
2. $900
3. $1200
4. $1800