Question 1

Events that are typically not covered by your homeowner's insurance include all of the following,except

Accepted Answer

Bursting of frozen pipes is typically covered by homeowner's insurance, while termites, earthquakes, and nuclear accidents are not.

Question 2

Most home insurance policies provide coverage for

Accepted Answer

Most home insurance policies provide liability coverage, which protects the homeowner in case someone is injured on their property and sues for damages. Earthquake coverage and flood coverage are typically not included in standard policies and would need to be added as separate endorsements or policies. Additional personal property floaters may be available as an add-on to cover high-value items not fully covered by the standard policy.

Question 3

Homeowner's insurance provides insurance in the event of property damage or personal liability relating to home ownership,but not theft.

Accepted Answer

Homeowner's insurance typically provides coverage for theft or burglary, in addition to property damage and liability.

Question 4

You have cash value coverage for your personal property on your homeowner's policy.A camera that cost you $300 eight years ago had a life expectancy of 10 years.The camera was stolen,and a new one will cost only $200.How much will the insurance company pay?

Accepted Answer

The answer of You have cash value coverage for your...

Question 5

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

Accepted Answer

A higher deductible means that the homeowner is assuming more of the risk and responsibility for any potential damages or claims. Therefore, the insurance company can offer a lower premium since they are covering less of the potential costs.

Question 6

To cover valuable personal property not adequately covered by your homeowner's policy,you should take out a(n)________ policy.

Accepted Answer

The personal articles floater provides coverage for valuable personal property such as jewelry, art, and collectibles, which may not be fully covered or may have limitations under a standard homeowner's policy.

Question 7

The liability component of your homeowner's policy will cover all of the following situations except one.Which situation will not be covered?

Accepted Answer

Liability coverage in homeowner's policies typically covers bodily injury and property damage to others for which the homeowner is legally responsible. However, it does not cover contractual obligations or disputes, such as a neighbor suing for not fulfilling a promise to trim a tree, which is more of a civil disagreement rather than a liability issue.

Question 8

Your home insurance provides for replacement value for personal property losses.Your china hutch was vandalized and completely destroyed.Your hutch cost $400 four years ago,but a new one will cost you $600.How much will the insurance company pay?

Accepted Answer

The insurance company provides for replacement value, which means they will pay for what it would cost to replace the item with a similar one at today's prices. Since a new china hutch would cost $600, that is the amount that the insurance company will pay.

Question 9

If your neighbor falls down the steps in your home and sues,you could be held responsible for her injuries.

Accepted Answer

As the owner of the property where the incident occurred, you may be held liable for any injuries sustained by a visitor, and may be required to pay damages if found to be at fault for the accident.

Question 10

Under a cash value policy,the loss of a $600 item with an estimated life of five years that was purchased three years ago and has a replacement cost of $900 would result in a payment from the insurance company of

Accepted Answer

The answer of Under a cash value policy,the loss of...

Question 11

A replacement cost rider is important to add to your homeowner's policy because

Accepted Answer

A replacement cost rider ensures that in the event of a loss, your property is valued at the cost of replacement regardless of age or depreciation, which can be more beneficial compared to receiving the depreciated value plus inflation.

Question 12

A personal scheduled property floater should be added to your homeowner's insurance policy if

Accepted Answer

Both A and B are correct. A personal scheduled property floater is designed to provide additional coverage for valuable items such as expensive jewelry, watches, and original art that may exceed the limits of a standard homeowner's insurance policy. By adding this coverage, you can ensure that your valuable possessions are fully protected in case of theft, loss, or damage. A personal scheduled property floater may also be necessary to obtain coverage for items that are excluded or limited under your standard homeowner's insurance policy, such as accidental breakage of a valuable piece of art.

Question 13

All of the following actions are possible ways to reduce your homeowner's insurance,except

Accepted Answer

Changing insurance companies whenever you renew your policy may actually increase your homeowner's insurance, as insurance companies often provide discounts for customer loyalty. The other options listed are all valid ways to potentially reduce your homeowner's insurance.

Question 14

The additional living expenses component of a homeowner's policy is designed to

Accepted Answer

The additional living expenses component of a homeowner's policy is designed specifically to pay for temporary housing while your home is being repaired from covered damage.

Question 15

Which of the following is not covered in a standard homeowner's policy?

Accepted Answer

Standard homeowner's policies typically do not cover flood damage, which includes rivers overflowing their banks and washing a house away. Flood insurance usually requires a separate policy.

Question 16

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 help in case of theft, loss, or damage to the property, and can also make insurance claims much easier.

Question 17

Which of the following is considered personal property for home insurance coverage?

Accepted Answer

Furniture is considered personal property and is typically covered under a home insurance policy. The other options listed (an automobile, a garage, and trees and shrubs) would typically require separate insurance coverage.

Question 18

During an unusually heavy rain,the basement of your house flooded and an antique dresser from the 1860s was destroyed.The dresser was originally purchased for $1,300 10 years ago and was recently appraised for $2,600; you recently received an offer from an antique collector for $3,100.Under a standard homeowner's policy,how much would you receive from your insurance company to cover this loss?

Accepted Answer

The answer of During an unusually heavy rain,the basement of...

Question 19

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?

Accepted Answer

Since the deductible is $250, the insurance company will subtract that amount from the total damage of $600, leaving $350. Therefore, the insurance company will pay $350 towards the claim.

Question 20

The best way to reduce your homeowner's insurance premiums is to

Accepted Answer

Increasing your deductible will result in lower premiums because the insurance company's risk decreases as you assume more financial responsibility for potential damages or losses. Insuring your home for just 60% of its value is not recommended because in the event of a total loss, you may not receive enough money to rebuild. Dropping coverage for medical payments or eliminating liability coverage can leave you vulnerable to financial ruin if someone is injured on your property, and it is determined that you are at fault.

Quiz 11: Auto and Homeowners Insurance