Difficulty: Medium

Average Score: 63%

All of the following describe examples of risk avoidance EXCEPT the insured

Rationale

Recognizing that his driving skills are deteriorating and therefore increasing the liability limits of his auto policy.

This choice reflects a risk management strategy rather than risk avoidance. By increasing the liability limits, the insured is acknowledging a potential risk associated with driving but is not avoiding the risk itself.

A (recognizing that his driving skills are deteriorating and therefore increasing the liability limits of his auto policy.) CORRECT

This choice indicates that the insured is aware of the risk involved in driving due to deteriorating skills and is taking steps to mitigate potential financial loss rather than avoiding the risk altogether. Risk avoidance would entail giving up driving entirely, whereas increasing liability limits simply prepares for potential consequences.

B (sensing the chance of a lawsuit and therefore giving his pet Bengal tiger to a local zoo.) YOUR ANSWER

This action exemplifies risk avoidance because the insured is actively removing the potential risk associated with owning a Bengal tiger, which could lead to a lawsuit. By placing the tiger in a zoo, the insured eliminates the liability risk entirely.

C (never leaving his house after dark.) YOUR ANSWER

This choice demonstrates risk avoidance as the insured is avoiding potential dangers that may arise from being outside after dark. By staying indoors, he minimizes exposure to risks such as crime or accidents.

D (never flying in airplanes.) YOUR ANSWER

This option also illustrates risk avoidance since the insured chooses not to fly, thus eliminating the risk associated with air travel. The decision reflects a proactive approach to avoiding the potential hazards of flying.

Conclusion

Risk avoidance involves taking actions that eliminate exposure to potential hazards. In this case, options B, C, and D exemplify risk avoidance by eliminating specific risks, while option A represents a risk management strategy that acknowledges the risk but does not eliminate it. Understanding these distinctions is crucial in effective risk management practices.

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