question

The purpose of insurance is to help protect you and your family against financial hardship due to hazard, accident, death, and similar risks.

answer

true

question

Personal risks, property risks, and liability risks are types of speculative risks.

answer

false

question

Risk management is an organized strategy for protecting and conserving assets and people.

answer

true

question

The most common method of dealing with risk is to shift, or transfer it to an insurance company or some other organization.

answer

true

question

Self-insurance is the process of establishing a monetary fund that can be used to cover the cost of a loss.

answer

true

question

Property losses can be categorized into destruction of property, and losses due to robbery, burglary, vandalism, or arson.

answer

true

question

Liability is legal responsibility for the financial cost of another person's losses or injuries.

answer

true

question

Homeowner's insurance does not cover additional living expenses and personal property.

answer

false

question

Personal property refers to building and other structures covered by homeowner's insurance.

answer

false

question

Personal belongings that have a high value require coverage with a personal property floater.

answer

true

question

The purpose of a household inventory is to provide evidence of items covered by home insurance.

answer

true

question

Increased liability insurance is available with an umbrella policy.

answer

true

question

Medical payments coverage in a home insurance policy is designed to pay for legal action taken against a homeowner who may be legally responsible for injury or property damage of others.

answer

false

question

The Comprehensive Form of homeowner's insurance includes coverage for damage due to floods.

answer

false

question

Replacement cost for settling property insurance claims is less costly than the actual cash value method.

answer

false

question

A home made of wood is more expensive to insure than a comparable brick structure.

answer

true

question

The deductible amount in your insurance policy does not affect the cost of your insurance.

answer

false

question

Financial responsibility laws require that drivers have automobile liability insurance.

answer

false

question

The 100/300 amounts for bodily injury liability insurance refer to the costs of insurance coverage.

answer

false

question

Medical payments automobile insurance coverage pays for the costs of injuries to persons in the driver's vehicle.

answer

true

question

No-fault insurance systems have consistently reduced the time and costs involved in settling claims.

answer

false

question

Collision coverage pays for damage to your vehicle for such hazards as fire, theft, or wind damage.

answer

false

question

Property damage liability coverage would pay for damage to another vehicle for which you were at fault.

answer

true

question

The driver classification category is based on automobile style, model, and value of the vehicle.

answer

false

question

The purpose of an assigned risk pool is to assist people with poor driving records in obtaining automobile insurance coverage.

answer

true

question

Peril is defined as A) the refusal by an insurance company to pay for the covered loss. B) the cause of risk. C) the cause of a possible loss. D) an uncertainty as to loss.

answer

C) the cause of a possible loss.

question

Defective house wiring is an example of a A) hazard. B) peril. C) risk. D) speculation.

answer

A) hazard.

question

The uncertainties of direct and indirect losses to personal or real property due to fire, wind, accident, theft, etc., are called ____________ risks. A) personal B) business C) property D) liability E) speculative

answer

C) property

question

Possible losses due to negligence resulting in bodily harm or property damage to others are called ____________ risks. A) speculative B) liability C) property D) personal E) commercial

answer

B) liability

question

Starting a small business that may or may not succeed is an example of ___________ risk. A) speculative B) pure C) commercial D) personal E) liability

answer

A) speculative

question

Using a home security system is an example of ____________ risk. A) shifting B) accepting C) reducing D) sharing E) transferring

answer

C) reducing

question

Wearing a seat belt in an automobile to protect yourself against injury is an example of ____________ risk. A) reducing B) assuming C) pooling D) shifting E) avoiding

answer

A) reducing

question

Which of the following would be covered by a home insurance policy? A) hospital expenses for surgery B) damage to another person's car when driving C) accidental injury to a coworker on the job D) wind damage to your roof E) theft of business supplies from your office

answer

D) wind damage to your roof

question

The legal responsibility for the financial cost of another person's losses or injuries is referred to as A) theft. B) robbery. C) liability. D) assigned risk. E) collusion.

answer

C) liability.

question

If a homeowner leaves toys on stairs that results in injury to a delivery person, this may be ruled as A) vicarious liability. B) negligence. C) assigned risk. D) umbrella coverage. E) coinsurance.

answer

B) negligence.

question

Negligence refers to A) failure to take ordinary and reasonable care. B) cancellation of insurance. C) property damage. D) high risk insurance coverage. E) common hazards in our society.

answer

A) failure to take ordinary and reasonable care.

question

While cleaning your home, a worker damages some furniture. You take action against the worker's employer to cover the cost of the damage. This is an example of a (n) ____________. A) hazard B) risk C) deductible D) peril E) liability

answer

E) liability

question

High winds cause damage to trees, shrubs, and other plants. This insurance claim would be covered under the ____________ component of homeowner's insurance. A) additional living expenses B) personal property C) building and other structures D) personal liability E) property damage

answer

C) building and other structures

question

The additional living expenses component of a home insurance policy is designed to A) pay for temporary housing while your home is repaired. B) cover damage to property while away from home. C) reimburse a homeowner for damage done by a visitor. D) pay for medical expenses of people injured on your property. E) pay for repairs caused by fire or other hazards.

answer

A) pay for temporary housing while your home is repaired.

question

Which of the following is considered personal property for home insurance coverage? A) an automobile B) a garage C) furniture D) a house E) trees and shrubs

answer

C) furniture

question

Georgette Valentine has expensive photography equipment for use in her hobby. Which of the following coverage would pay for damage or theft of this equipment? A) an umbrella policy B) a household inventory C) additional living expense coverage D) a personal property floater E) a coinsurance floater

answer

D) a personal property floater

question

The purpose of a household inventory is to A) reduce insurance costs. B) document owned property. C) obtain personal property floater coverage. D) increase liability coverage. E) lower the chance of negligence.

answer

B) document owned property.

question

The ____________ coverage of a home insurance policy would cover accidental damage to another person's property by a member of your family. A) supplementary B) personal property C) medical payments D) additional living expenses E) personal liability

answer

A) supplementary

question

An umbrella policy is designed to cover A) expensive personal property. B) additional buildings on your property. C) property when traveling away from home. D) major personal liability suits. E) flood damage.

answer

D) major personal liability suits.

question

Most home insurance policies provide coverage for A) earthquake damage. B) flood damage. C) an umbrella liability. D) personal property floaters. E) medical payments.

answer

E) medical payments.

question

Renter's insurance would include coverage for A) flood damage. B) personal property. C) building and other structures. D) umbrella liability. E) earthquake damage.

answer

B) personal property.

question

Which of the following are not covered by renter's insurance? A) medical expenses for injuries to visitors B) fire damage of the building's roof C) additional living expenses D) accidental damage to the property of others E) cost of legal action due to personal liability

answer

B) fire damage of the building's roof

question

Which form of homeowner's policy provides coverage for the most risks? A) special B) basic C) broad D) tenants E) modified coverage

answer

A) special

question

Ainsley and Garret recently purchased a new home and desire coverage for all causes of loss or damage except those specially excluded by the policy. They should obtain the ____________ form of homeowner's policy. A) basic B) broad C) special D) modified coverage E) condominium

answer

C) special

question

The ____________ form of homeowner's insurance is designed to cover the personal property of renters against the risks listed in the policy. A) basic B) broad C) condominium D) tenant's E) special

answer

D) tenant's

question

Your home insurance provides for replacement value for personal property losses. A microwave is stolen. It cost $300 two years ago and has an expected life of six years. A comparable microwave costs $400 today. What amount will the insurance company pay? A) $100 B) $150 C) $200 D) $350 E) $400

answer

E) $400

question

Which of the following does not affect home insurance costs? A) location of home B) type of structure C) the number of people occupying a home D) coverage amount and policy type E) company differences

answer

C) the number of people occupying a home

question

The ____________ method to settle claims is based on the current replacement cost of a damaged or lost item less depreciation. A) replacement value B) actual cash value C) umbrella D) endorsement E) personal property floater

answer

B) actual cash value

question

Home insurance costs are affected most directly by A) the profits of the insurance company. B) insurance agents' commission. C) government regulations that set premiums. D) processing costs of claims. E) the number of claims in an area.

answer

E) the number of claims in an area.

question

Your home insurance policy has a $250 deductible. If a small fire causes $600 damage to your home, what amount of the claim would the insurance company pay? A) $250 B) $350 C) $450 D) $600 E) not able to determine from this information

answer

B) $350

question

The purpose of financial responsibility laws is to A) reduce auto insurance costs. B) assist poor drivers in getting insurance coverage. C) protect the public from financial losses due to auto accidents. D) require uninsured motorists coverage. E) pay for high medical costs of auto accident victims.

answer

C) protect the public from financial losses due to auto accidents.

question

____________ provides coverage for the risk of financial loss due to legal expenses, medical expenses, lost wages, and other expenses associated with injuries caused by an automobile accident for which you were responsible. A) Medical payments B) Bodily injury liability C) Uninsured motorists' protection D) No-fault insurance E) Comprehensive insurance

answer

B) Bodily injury liability

question

The 100 in 100/300/50 refers to A) property damage liability coverage. B) the amount of the deductible. C) collision coverage. D) the total coverage for an accident. E) the limit for bodily injury claims that can be paid to one person.

answer

E) the limit for bodily injury claims that can be paid to one person.

question

Henry Edwards was injured in an accident caused by another driver who did not have insurance. Henry's medical expenses would be covered by A) medical payments. B) collision. C) bodily injury liability. D) uninsured motorists' protection. E) no-fault coverage.

answer

D) uninsured motorists' protection.

question

Which of the following coverage would pay for medical care for people who were injured in your automobile? A) medical payments B) bodily injury liability C) collision D) comprehensive E) no-fault insurance

answer

A) medical payments

question

Which of the following is a system in which drivers involved in an accident collect medical expenses, lost wages, and related injury costs from their own insurance company? A) assigned risk pool B) financial responsibility coverage C) comprehensive system D) no-fault insurance E) uninsured motorists' protection

answer

D) no-fault insurance

question

____________ protects you against financial loss when your car damages the property of others. A) Collision B) Comprehensive physical damage C) Property damage liability D) No-fault insurance E) Assigned risk coverage

answer

C) Property damage liability

question

The 25 in 50/100/25 refers to ____________ coverage. A) collision B) bodily injury liability C) comprehensive physical damage D) medical payments E) property damage liability

answer

E) property damage liability

question

Which of the following coverage would pay for damage to your automobile in an accident for which you were at fault? A) property damage liability B) collision C) comprehensive physical damage D) no-fault insurance E) assigned risk pool coverage

answer

B) collision

question

Comprehensive coverage would cover financial losses due to A) injuries caused by a driver without insurance. B) damage to your car in an accident for which you were at fault. C) damage to your car caused by wind or hail. D) legal action against you for an accident. E) damage to a neighbor's tree with your car. Answer: C

answer

C) damage to your car caused by wind or hail.

question

____________ coverage would pay for damage to your vehicle in an accident for which another driver with insurance was legally at fault. A) Property damage liability B) Collision C) Comprehensive physical damage D) Uninsured motorists' protection E) Assigned risk

answer

A) Property damage liability

question

Which coverage pays for mechanical assistance in the event that your vehicle breaks down? A) Rental reimbursement B) wage loss insurance C) emergency road service D) No-fault insurance E) Collision insurance

answer

C) emergency road service

question

Your geographic location is a major factor in determining the ____________ used to calculate your automobile insurance premiums. A) driver classification B) assigned risk pool C) coverage level D) legal responsibilities E) rating territory

answer

E) rating territory

question

Driver classification is not based on: A) age B) sex C) marital status D) driving record E) rating territory

answer

E) rating territory

question

Which of the following refers to a category based on age, sex, marital status, and driving habits that is used to set automobile insurance premiums? A) rating territory B) assigned risk pool C) no-fault system D) driver classification

answer

D) driver classification

question

Which of the following factors is used to determine a person's driver classification? A) age B) type and age of vehicle C) claims in your geographic area D) insurance company claim processing costs E) state insurance premium regulations

answer

A) age

question

The purpose of an assigned risk pool is to A) provide insurance for poor drivers who can't get motor vehicle insurance. B) reduce medical costs associated with auto accidents. C) take unsafe drivers off the road. D) reduce auto insurance premiums with state regulation. E) offer premium discounts to safe drivers.

answer

A) provide insurance for poor drivers who can't get motor vehicle insurance.

question

A system that requires each insurance company operating in a state to provide coverage to several individuals with poor driving records is referred to as A) no-fault insurance. B) an assigned risk pool. C) premium discounts. D) comprehensive coverage.

answer

B) an assigned risk pool.

question

What coverage is commonly included in a homeowner's insurance policy?

answer

Most home insurance policies include coverage against fire, theft, and other hazards for your home and other structures, and personal property. In addition, policies cover additional living expenses, personal liability, medical payments, and supplemental coverage for minor property damage mishaps.

question

What factors affect the cost of home insurance?

answer

The main influences on home insurance costs are type of home, construction materials, location of residence, amount of coverage, type of policy (basic, broad, special), deductibles, discounts for fire and burglary devices, and the company selected.

question

What is financial responsibility law? What is its purpose?

answer

Financial responsibility law is a state legislation that requires drivers to prove their ability to cover the cost of damage or injury caused by an automobile accident. Since very few people have the money they'd need to meet financial responsibility requirements on their own, the state law mandates that drivers abide by this law.

question

A friend wants to understand what affects the cost of auto insurance. Explain the factors used to determine the automobile insurance premiums a person pays.

answer

The main factors that influence the amount paid for auto insurance are the year, make, and model of automobile; your geographic location; your driver classification, including age, sex, marital status, driving record and driving habits; the amount of coverage; and discounts for driver training, security devices, or other factors.

Chapter 8 Home and Automobile Insurance – Flashcards

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards