Arkansas Insurance Adjuster Practice Exam

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Prepare for the Arkansas Insurance Adjuster Exam with flashcards and multiple choice questions, each offering hints and explanations. Equip yourself for your test confidently!

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Clean Machines offering 10-year warranties for dishwashers to Six Stars Development Company is an example of:

Risk reduction.
Risk transference.
Risk avoidance.
Risk retention.

The correct answer is: Risk reduction.

This situation is an example of risk reduction because a warranty is being offered to mitigate the potential financial loss for Six Stars Development Company if their dishwashers were to malfunction or break down within the 10-year period. It is not an example of risk transference because Clean Machines is not transferring the risk to Six Stars Development Company, but rather reducing it through the warranty. It is also not an example of risk avoidance as Clean Machines is still assuming some risk by offering the warranty. Lastly, it is not an example of risk retention because there is a plan in place to address and minimize the potential risk for Six Stars Development Company.