1. In insurance terms a peril is best defined as what?

The cause of a loss

A peril is the cause of a loss, such as fire or illness, whereas a hazard is a condition that increases the chance or severity of a loss.

2. A mutual insurance company is generally owned by whom?

Its policyholders

A mutual insurer is owned by its policyholders, who may receive dividends, while a stock insurer is owned by stockholders.

3. Purchasing insurance to handle the financial consequences of risk is an example of which risk management technique?

Risk transfer

Buying insurance is a form of risk transfer, shifting the financial burden of a possible loss to the insurer.

4. An insurance contract is called unilateral because what?

Only the insurer makes a legally enforceable promise to pay

An insurance contract is unilateral because only the insurer makes a legally enforceable promise; the insured is not legally required to pay future premiums.