Question 1

An HDTV was purchased for $6500 and is now three years old.If it is stolen and it is deemed to have a life of five years,the insurance company will settle for $3000 under a cash value policy.

Accepted Answer

The insurance company will not settle for $3000 under a cash value policy if the HDTV was purchased for $6500 and is now three years old. The cash value of the HDTV would be lower, taking into account depreciation over time. The exact settlement amount would depend on the specific terms of the insurance policy.

Question 2

Named perils coverage protects the automobile owner against theft of specific items named in the auto insurance policy.

Accepted Answer

Named perils coverage is a type of insurance policy that only covers specific perils or risks listed in the policy. It typically applies to property insurance and not automobile insurance. Comprehensive coverage, which is a common type of auto insurance, covers theft of the entire vehicle, including any personal belongings inside it, subject to the deductible selected by the policyholder.

Question 3

In general,insurance companies generate their profit from

Accepted Answer

Insurance companies generate their profit by investing the proceeds of premiums until the funds are needed to cover claims, earning interest or other returns on those investments. This allows them to use the money they collect from premiums to generate additional revenue, which ultimately contributes to their bottom line.

Question 4

Refusing to go bungee jumping is

Accepted Answer

Refusing to go bungee jumping is avoiding risk because it involves not taking part in an activity that has a certain level of danger or potential harm. The other options involve some level of engaging with the risk, such as accepting it, transferring it to someone else, or sharing it with others.

Question 5

Brenda inherited some pieces of valuable art which she keeps in her home.She needs full comprehensive coverage to make sure her art is covered for replacement value.

Accepted Answer

The answer of Brenda inherited some pieces of valuable art...

Question 6

Comprehensive coverage insures Peter against damage to his car that results from something such as hail or vandalism.

Accepted Answer

Comprehensive coverage is a type of insurance that covers damage to a car caused by events outside of the driver's control, such as hail, theft, vandalism, and natural disasters.

Question 7

If Zack had a replacement value home insurance policy and had a custom made table that he paid $16 000 for a number of years ago and which was recently appraised for $22 000,the insurance company would pay him $16 000 for it,if it were destroyed in a fire.

Accepted Answer

With a replacement value home insurance policy, the insurance company would pay the cost to replace the item, which in this case would be the appraised value of $22,000, not the original purchase price of $16,000.

Question 8

If Eric's dog ran across a road and caused a driver to swerve and injure a passerby,Eric's umbrella personal liability coverage could cover the expenses of both the driver and the injured pedestrian.

Accepted Answer

Eric's umbrella personal liability coverage can cover the expenses of both the driver and the injured pedestrian as this coverage typically provides additional liability coverage above and beyond the limits of his primary insurance policies.

Question 9

Getting the flu vaccine is an example of

Accepted Answer

Getting the flu vaccine helps reduce the risk of contracting the flu by building up immunity.

Question 10

If your neighbour falls down the steps in your home and sues you for damages,you could be held responsible to pay compensation for his or her injuries and rehabilitation.

Accepted Answer

As a homeowner, you have a duty of care to ensure the safety of anyone who visits your property. If your neighbour falls down the steps in your home and it can be proven that you were negligent in maintaining a safe environment, then you could be held liable for their injuries and rehabilitation costs.

Question 11

Insurance agents for an insurance company

Accepted Answer

Insurance agents primarily market insurance policies to potential clients. They are responsible for selling the company's insurance products but do not typically calculate risks, decide on the policies to offer, or set premium rates. Those tasks are usually handled by underwriters and actuaries within the company.

Question 12

It is a good idea to list all of your personal assets,estimate the market value of each item,and then film the contents of your house with a video camera to be able to show proof of their existence.

Accepted Answer

Listing and estimating the value of personal assets and filming the contents of the house can serve as a record in case of damage or loss and help in insurance claims.

Question 13

If you have automobile and homeowner's insurance,there is no reason to purchase an umbrella personal liability policy for additional coverage of $1 million.

Accepted Answer

While automobile and homeowner's insurance may provide liability coverage, they typically have limits that may not be enough to cover all damages and legal fees in the event of a lawsuit. An umbrella policy provides additional coverage beyond the limits of your other policies, up to the amount specified in the policy. Therefore, purchasing an umbrella policy can provide added protection and peace of mind.

Question 14

If Peter caused an accident,and his passenger,John,had to miss work for a month while he recovered,Peter's bodily injury liability coverage could cover medical expenses and loss of income for John.

Accepted Answer

Bodily injury liability coverage typically covers medical expenses and loss of income for passengers who were injured in an accident caused by the policyholder.

Question 15

Homeowner's insurance also covers medical payments and loss of income to the policyholder.

Accepted Answer

Homeowner's insurance typically covers damage to the property and personal liability for injuries to others, but it does not cover medical payments or loss of income for the policyholder themselves; those would be covered by health insurance and disability insurance, respectively.

Question 16

Using one insurer for all types of insurance will not reduce your homeowner's insurance premium.

Accepted Answer

Using one insurer for multiple types of insurance, such as auto and homeowner's insurance, can often lead to discounts on premiums, including the homeowner's insurance premium, due to bundling policies.

Question 17

Which of the following is the best case for the need for third party liability insurance coverage?

Accepted Answer

The answer of Which of the following is the best...

Question 18

A higher insurance deductible reduces the amount of coverage provided by homeowner's insurance,and therefore results in a lower insurance premium.

Accepted Answer

This statement is true. A higher insurance deductible means that the policyholder will be responsible for paying more out of pocket before the insurance coverage applies. This reduces the amount of coverage provided by the insurance company, and as a result, the insurance premium is lower.

Question 19

Driving carefully and obeying traffic laws is

Accepted Answer

By driving carefully and obeying traffic laws, you are actively taking steps to reduce the risk of accidents or incidents on the road. This is an example of risk reduction, as opposed to avoiding or accepting risk, or simply managing risk without actively trying to minimize it.

Question 20

While renter's insurance would reimburse you if you had to replace furniture damaged in a fire,it would not pay for the medical expenses for a friend who was injured in your home.

Accepted Answer

Renter's insurance typically includes liability coverage, which can help pay for someone else's medical bills if they are injured in your home.

Quiz 8: Protecting Your Wealth - Auto and Homeowner's Insurance