Deck 10: Property and Liability Insurance

Question 1

In the United States,the first type of homeowner's insurance was fire insurance,offered in 1935 by a small company in Charleston,South Carolina.

Answer 1

False

Question 2

Renter's insurance includes liability insurance.

Answer 2

False

Question 3

Your apartment building burned down while you were on vacation.Fortunately,you have renter's insurance.What will your policy cover?

A)Any damages to the building structure
B)Your neighbor's personal property
C)Your hotel and additional expenses based on a percentage of your property coverage
D)All of the above are correct.
E)None of the above are correct.

Answer 3

Your hotel and additional expenses based on a percentage of your property coverage

Question 4

John Meadow rents an apartment and wants tenant's insurance or an ________ policy.

A)HO-1
B)HO-2
C)HO-3
D)HO-4
E)HO-6

Question 5

Which of the following is not a consideration in determining the amount of homeowner's insurance a person needs?

A)Cover the entire replacement cost in the event of a complete loss.
B)Match the insurance coverage of similar homes in your neighborhood.
C)Protect against the effect of inflation eroding away your coverage.
D)Purchase flood or earthquake coverage if you are in an area prone to these occurrences.
E)Determine if detached structures are adequately covered under standard policies.

Question 6

An HO-3 policy is a special form of homeowner's insurance policy that offers open perils protection except for those perils specifically excluded.

Question 7

While you were walking your dog,she bit a child.Medical treatment for the child would fall under Coverage C: Personal Property.

Question 8

Your backyard shed was damaged by a windstorm.Your coverage is based under Coverage D: Loss of Use.

Question 9

Fire,theft,and windstorm damage are examples of

A)perils.
B)hazards.
C)miscellaneous mishaps.
D)liabilities.

Question 10

The inflation guard endorsement on your homeowners insurance policy automatically decreases your policy premiums each year due to the inflation rate.

Question 11

Personal liability insurance protects you from financial losses incurred if someone is injured on your property or as a result of your actions.

Question 12

Property insurance protects you from the financial risk associated with property losses.

Question 13

Brandi thought it quite funny to have a decorative outhouse put on her property as a conversation piece.This structure is covered under Coverage A: Dwelling on her home owners policy.

Question 14

Generally,a personal umbrella policy is an expensive policy that provides excess liability insurance over basic underlying contracts.

Question 15

Angela's home became overrun with termites.She had to stay in an apartment temporarily while her home was being fixed.The provision on her home owners policy that covers her expenses while she is not able to live in her home is known as: Coverage D: Loss of Use.

Question 16

An HO-4 policy is a renter's insurance policy that protects the renter's personal property.

Question 17

John Murphy experienced a freak storm that damaged his roof and allowed water to leak into the house.The agent and adjuster said the peril was not covered under his HO-2 policy.John wishes he had taken out an ________ policy.

A)HO-1
B)HO-3
C)HO-4
D)HO-5
E)HO-6

Question 18

Your boyfriend is living in an apartment complex that has had a recent rash of robberies.He has $5,000 worth of rare coins.What should he do to protect himself in case of a robbery?

A)Take a written and video tape inventory of his property.
B)Add a personal articles floater to his policy.
C)Take out personal property replacement cost coverage.
D)Only B and C above
E)A,B,and C above

Question 19

An attached garage is covered under Coverage B: Other structures.

Question 20

Flood protection insurance is generally administered and subsidized by the federal government through the Department of Housing and Urban Development.

Question 21

Antoine LaDuke suffered a major loss on his older home due to mud from a flood.Although he had homeowner's insurance,what was the probable reason he was not covered?

A)His home was probably too expensive.
B)His policy excluded flood-related damages.
C)This is a personal liability issue.
D)Older homes are excluded from flood-related damages.

Question 22

Coverage A: Dwelling protects

A)personal property in a dwelling.
B)unattached structures on the dwelling site.
C)your home.
D)any attachments to your home.
E)both C and D above

Question 23

On your home owners policy ________ protects any personal property that's owned or used by the policyholder,regardless of the location of this property.In other words,if you're on a vacation
In Hawaii and someone hits you with a pineapple and steals your suitcase,your personal property is still covered.

A)Coverage A
B)Coverage B
C)Coverage C
D)Coverage D
E)None of the above

Question 24

The disadvantage of actual cash value coverage of personal property compared to replacement cost coverage is that it

A)will reimburse you for replacement cost minus estimated depreciation.
B)will reimburse you for the cash value of a new item.
C)must be reported as a loss on your tax return.
D)does not have to be reported as a loss on your tax return.
E)none of the above.

Question 25

Amy Lambert's home is insured for $85,000 and her detached garage is destroyed by a windstorm.She hopes to collect $11,850 under her homeowner's policy.What will happen?

A)Amy will receive $11,850 under Coverage B: Other structures
B)Amy will receive $11,850 under Coverage A: Dwelling
C)Amy will receive $8,500 under Coverage B: Other structures
D)Amy will receive $8,500 under Coverage A: Dwelling
E)Amy will receive $11,850 under Coverage C: Personal property

Question 26

What is the main difference between replacement cost coverage and actual cash value coverage?

A)Replacement cost coverage does not consider depreciation.
B)Actual cash value does not consider depreciation.
C)Replacement cost coverage requires an endorsement to your policy.
D)All of the above are correct.
E)Only A and C are correct.

Question 27

Explain Section I: Property Coverage for HO-2 and HO-3 policies.

Question 28

Wilber Robinson found out that his homeowner's coverage comes in handy when a neighbor steps on a garden rake and it flips up and causes a concussion.Josh did just that and spent two weeks in the hospital running up a $23,000 bill.Josh was covered under

A)section II medical payments.
B)section II personal liability.
C)section I loss of use.
D)added liability insurance.
E)the 80 percent rule.

Question 29

You have the most popular house on the block for the neighborhood children to play at.You have a trampoline,tree fort and jungle gym.Your family also has two large German shepherd dogs.What should you consider given the described situation?

A)Purchasing personal property replacement cost coverage
B)Purchasing earthquake coverage
C)Purchasing an umbrella policy
D)None of the above

Question 30

Suppose burglars trashed your apartment and stole your personal property.Your rent is $350 per month and you had to live in another apartment house for two months while the landlord had the apartment put back into livable condition.Under which section of an HO policy would you be covered and how much would you recover because of the move?

A)Section I coverage C,$350
B)Section I coverage C,$700
C)Section I coverage D,$350
D)Section I coverage D,$700
E)Section II coverage,$350

Question 31

The purpose of a personal umbrella policy,as an addition to your homeowner's policy,is primarily to protect you from

A)acts of God,such as falling objects,hail,etc.
B)flood damage.
C)lawsuits and judgments.
D)faulty construction of your home.
E)contested title to your property.

Question 32

Your best friend's apartment has just been robbed,and he had no insurance.What would you suggest to your friend to better protect himself from such losses in the future?

A)Purchase renter's insurance and add a personal articles floater.
B)Take out personal property replacement cost coverage.
C)Take a written and video tape inventory of your property.
D)Only B and C above
E)A,B,and C above

Question 33

Insurers in California are required to offer ________ coverage to consumers due to the substantial risk factors in that state.

A)renters
B)liability
C)inflation
D)earthquake
E)bankruptcy

Question 34

When you purchase a(n)________,you are obtaining an extension to a homeowner's insurance policy that provides coverage for all personal property regardless of where it is located.

A)uninsured property addendum
B)property addendum
C)personal rider
D)personal articles floater
E)none of the above

Question 35

Supplemental coverage for homeowner's insurance is available through endorsements.Which one of the following is not a common form of additional coverage?

A)Personal articles floaters
B)Earthquake coverage
C)Flood protection
D)Medical payments
E)Inflation guard

Question 36

The replacement value of the house less accumulated depreciation (which is the decline in value over time due to wear and tear)is known as

A)actual cash value.
B)replacement value.
C)market value.
D)depreciation.
E)none of the above.

Question 37

If you wanted to obtain an endorsement that automatically updates the level of property coverage based on an index of replacement costs that continually updates the cost of building a home,you would ask for a(n)

A)inflation guard.
B)automatic adjustment policy.
C)replacement cost index.
D)continual adjustment policy.
E)none of the above.

Question 38

Reggie was hosting a BBQ when the deck fell off his house.Several of his friends were hurt in the accident.Luckily for Reggie he has ________ coverage on his home owner's insurance.

A)personal articles
B)loss of use
C)personal liability
D)none of the above

Question 39

You have recently inherited a sum of money.You are purchasing an old Victorian home which was built in 1856.The type of insurance needed on the house would be

A)HO-1.
B)HO-4.
C)HO-6.
D)HO-8.

Question 40

Alfred lost his 3-year-old camera.It cost him $200 three years ago and had a life expectancy of 6 years.Alfred has actual cash value insurance on this camera,which means his insurance company will issue him a check for ________ for his loss.A new camera costs $150.

A)$75
B)$150
C)$200
D)none of the above

Question 41

Most companies allow six endorsements or supplemental coverages to meet their customers' needs.Name and describe the six.Which one is unique and stands apart from the others?

Question 42

Your home and property have a market value of $200,000.Since you want to make sure that you meet the coinsurance provisions,you should have at least ________ of insurance.

A)$160,000
B)$180,000
C)$200,000
D)$220,000
E)none of the above

Question 43

Lisa and Eric want to keep the cost down on the homeowner's insurance they will need.After talking to their parents they developed a list of ways to do so.Identify the one mistake on it.

A)Take as high a deductible as you can afford to self insure.
B)Install an adequate security system.
C)Pay your insurance premiums quarterly.
D)Install adequate smoke detectors.
E)Insure your cars with the homeowner's company.

Question 44

What determines the cost of your homeowner's insurance?

A)The location of your home
B)The type of structure
C)The level of coverage and policy type
D)All of the above

Question 45

The first homeowner's policy in the United States was written in 1735 in what city?

A)New York
B)San Francisco
C)Charleston,S.C.
D)Chicago

Question 46

One way to lower the premiums you pay on your insurance is to have a higher deductible.

Question 47

HO-6 is for?

A)Home Owners
B)Condominiums
C)Renters
D)Older Homes

Question 48

Describe each of the six HO packaged policies.Which one is the most common?

Question 49

Lisa and Eric were notified that replacement cost coverage is in effect on a home owner's policy only if the home is insured for at least 80% of its replacement cost.This provision is known as the

A)Replacement Cost Rule.
B)80 Percent Rule.
C)Replacement Cost Provision.
D)none of the above.

Question 50

A(n)________ is an insurance company that distributes its products to customers without the use of agents.

A)direct writer
B)private writer
C)underwriter
D)public writer

Question 51

Your insurance credit score depends on,among other things,your payment history and the types of credit used.

Question 52

Since most homeowners' claims are for relatively small amounts,high deductibles will keep your insurance costs down.

Question 53

The minimum level of personal liability coverage per accident in a homeowner's policy is?

A)$50,000
B)$100,000
C)$250,000
D)$150,000

Question 54

Barbara is over 55 so she qualifies for additional home owner's insurance discounts.

Question 55

A lower insurance credit score generally results in lower homeowner's insurance rates.

Question 56

What is the number one natural disaster in the united States?

A)Wildfires
B)Tornados
C)Earthquake
D)Floods

Question 57

The first homeowner's policy in the United States was written to cover?

A)Flood
B)Theft
C)Fire
D)Personal property

Question 58

Describe the difference between actual cash value and replacement value.

Question 59

The coinsurance provision requires that the insurance company will pay a portion of your financial losses in the event of a catastrophe.

Question 60

Provide an explanation of Section II: Personal Liability Coverage.

Question 61

Pretend you are an insurance agent.Explain the coinsurance and 80 percent rule to a client.

Question 62

By increasing your deductible from $250 to $1,000 you could save up to ________ percent.

A)30
B)24
C)15
D)20

Question 63

Since there were no witnesses to the robbery at your apartment,there is no reason to contact the police.

Question 64

Eric and Lisa Lambert are purchasing a home for the first time.Their insurance company wants them to insure at least ________ of the home's full replacement cost.

A)70%
B)75%
C)80%
D)85%
E)90%

Question 65

For structural damage to your dwelling,it would be a good idea to request for an estimate from a qualified contractor before accepting the check from your insurance company.

Question 66

Give the three basic factors that determine the cost of your homeowner's insurance.List the possible ways of saving money on premiums.

Question 67

Joey's house and property has a market value of $550,000.According to the coinsurance provision,
He must be insured for

A)$550,000.
B)$500,000.
C)$425,000.
D)$440,000.

Question 68

Suppose Lisa and Eric do not purchase an adequate amount of insurance on their home.In the event of a claim,they would pay a portion of it.This is the

A)inflation guard.
B)added liability.
C)replacement cost.
D)coinsurance provision.
E)70 percent rule.

Question 69

Which of the following statements best describes the 80 percent rule?

A)Your home is covered for 80 percent of its original value,regardless of replacement cost.
B)Your home is covered for replacement cost,provided the total premiums paid are less than 80 percent of the outstanding premiums due.
C)Replacement cost coverage is only effective if your home is insured for at least 80 percent of its replacement cost.
D)Your house cannot be replaced if its replacement cost is less than 80 percent of assessed market value.
E)none of the above

Question 70

To make sure all of your personal property is paid for in the event of a loss,it is a good idea to make an inventory of all household contents.Tell what should be included.

Question 71

While transporting your TV to the repair shop,someone stole it from your car.Your TV is covered under your homeowner's coverage.

Question 72

Outline the considerations for choosing the amount of homeowner's insurance you need.

Question 73

The ________ is the amount that you agree to pay before insurance coverage kicks in.

A)pro rata share
B)gratis
C)allowance
D)deductible
E)none of the above

Question 74

Your home and property have a market value of $240,000.To meet the coinsurance provision,you would need at least ________ of insurance.

A)$144,000
B)$168,000
C)$192,000
D)$216,000
E)none of the above

Question 75

Jordan's house and property has a market value of $450,000.She would have to carry ________ of insurance to meet the coinsurance provisions.

A)$450,000
B)$400,000
C)$360,000
D) $$350,000

Question 76

Your home was damaged by a hail storm.This will require a police report in order for you to file a claim.

Question 77

Which of the following statements is true?

A)The lower your insurance credit score,the higher your homeowner's insurance rate will be.
B)The higher your insurance credit score,the higher your homeowner's insurance rate will be.

Question 78

By increasing your deductible from $250 to $500 you could save up to ________ percent.

A)20
B)18
C)12
D)10

Question 79

Allison's home and property has a market value of $325,000.According to the coinsurance provision,she must carry at least how much insurance?

A)$260,000
B)$300,000
C)$325,000
D)4250,000

Question 80

What factors are considered when insurance companies decide what rates to charge you for homeowner's insurance?

A)Whether you have an in-home sprinkler system
B)What type of building materials were used in the house
C)Your credit score
D)All of the above are correct.
E)All but B are correct.