1. An insured who becomes careless about safety simply because they have insurance illustrates a:

Morale hazard

A morale hazard is an attitude of carelessness arising from the existence of insurance.

2. For a risk to be considered insurable, the loss should generally be:

Definite, measurable, and due to chance

Insurable risks generally involve losses that are definite, measurable, fortuitous, and predictable in the aggregate.

3. An insurance policy is a conditional contract because:

Certain conditions must be met before the insurer pays a claim

A conditional contract requires that specified conditions, such as paying premiums and filing proof of loss, be met for the insurer to pay.

4. A business that chooses to set aside its own funds to pay for certain losses rather than buying coverage is using risk:

Retention

Retention is handling risk by keeping it and funding losses internally rather than transferring it to an insurer.