Risk Management and Insurance Products
Core concepts
This domain tests the risk management process - identify, analyze, select techniques (avoid, reduce, transfer, retain), implement, and monitor - and the insurance products that transfer risk. Candidates must know property (named-peril vs. special form), general liability (occurrence vs. claims-made), commercial auto, workers' compensation, umbrella/excess, inland marine, and professional liability. Understand co-insurance, deductibles, limits (per occurrence, aggregate), additional insured status, and business income with waiting periods. Personal lines fundamentals (homeowners forms, auto liability/collision) and life/health basics may appear. Know that insurance is only one risk-financing tool; retention and loss control often precede transfer.
Traps in questions
- Confusing occurrence and claims-made triggers; claims-made policies require reporting within the policy period or extended reporting period.
- Assuming an umbrella automatically covers every gap - it may be excess-only or drop-down.
- Forgetting co-insurance penalties when property is underinsured.
- Overlooking business income waiting periods and the need for extra expense coverage.
Worked example / rule of thumb
Rule of thumb: Match the trigger to the exposure. Worked example: a design firm faces claims years after work is completed. An occurrence-based general liability policy may not respond to professional negligence. A claims-made professional liability policy with a retroactive date and adequate extended reporting period is the correct transfer tool. Confirm the retro date precedes the earliest project and that the limit reflects the largest single claim.