Deck 3: Protecting Your Wealth - Auto and Homeowner's Insurance

Question 1

More than sixty percent of homeowner's insurance premiums go towards settling claims.

Answer 1

True

Question 2

Independent insurance agents are those that work for one Chaptericular company.

Answer 2

False

Question 3

A Chapter of accident benefits coverage includes coverage for drivers and their passengers in the event of an accident caused by an uninsured driver.

Answer 3

True

Question 4

In the context of insurance,the term liability is used to mean that you may be required to pay someone for damages that you caused.

Question 5

If you have good health insurance,you don't require accidents benefits coverage in your automobile policy.

Question 6

Legal expenses incurred by an insurance company when defending you against a lawsuit are deducted from your limits of liability coverage.

Question 7

The first step in the risk management process is to define and recognize your exposure to risk.

Question 8

When Jane decided not to select collision and comprehensive insurance coverage on her old car,she was accepting her exposure to financial loss from damage to her car.

Question 9

Insurance protects you against potential financial losses or liability that results from unexpected events.

Question 10

If Fred caused a car accident and his passenger required expensive medical care as a result,his third Chaptery liability coverage would first be used to cover those expenses.

Question 11

Insurance companies generate their revenue from charging premiums well above what they anticipate paying out in claims.

Question 12

Collision coverage is normally limited to the car itself and not to items that were damaged while in the car.

Question 13

Drivers considered "high risk" cannot get automobile insurance at any price.

Question 14

Some credit cards provide you with collision and comprehensive insurance benefits if you use that card to pay for car rentals.

Question 15

If Jack damages his car by skidding on ice and colliding with a fence,his property damage liability would cover the damage to his car.

Question 16

Jasmeen was involved in a car accident which caused extensive medical expenses for herself and her son totalling $700 000.If the driver who caused the accident had $200 000 third Chaptery liability coverage,then Jasmeen's family protection coverage could cover $500 000.

Question 17

Third Chaptery liability insurance coverage would cost more for an expensive car than for an inexpensive car of the same age.

Question 18

Insurance should be considered in some circumstances even when there is only a small likelihood than an event that could cause a financial loss would occur.

Question 19

Collision and comprehensive coverage is optional in most provinces with the possible exception that you are financing your car and it is required by the lender.

Question 20

Since insurance companies rely mostly on their premiums to cover claims,they price their insurance policies to reflect the probability of a claim and the size of the claim.

Question 21

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.

Question 22

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.

Question 23

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.

Question 24

Driving carefully and obeying traffic laws is

A)avoiding risk.
B)reducing risk.
C)accepting risk.
D)managing risk.

Question 25

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

Question 26

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.

Question 27

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.

Question 28

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

Question 29

Insurance agents for an insurance company

A)market insurance policies.
B)calculate the risks of specific policies.
C)decide what insurance policies to offer.
D)decide what premiums to charge.

Question 30

In general,insurance companies generate their profit from

A)overestimating the value of client claims and keeping the difference as profit.
B)investing the proceeds of premiums until the funds are needed to cover claims.
C)selling a lot of certain kinds of highly profitable insurance products.
D)only insuring people who are low risk to claim.

Question 31

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.

Question 32

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.

Question 33

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

Question 34

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

A)You cause a car accident and damage your Honda Civic.
B)You cause a car accident and destroy the other driver's Maserati.
C)You cause a car accident which disables a pedestrian.
D)You cause a car accident and the injuries cause you to miss six months of work.

Question 35

Refusing to go bungee jumping is

A)avoiding risk.
B)accepting risk.
C)transferring risk.
D)sharing risk.

Question 36

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.

Question 37

Getting the flu vaccine is an example of

A)avoiding risk.
B)reducing risk.
C)accepting risk.
D)transferring risk.

Question 38

If Zack had a replacement value home insurance policy and had a custom made table that he paid $16000 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.

Question 39

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

Question 40

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

Question 41

If you cause an accident resulting in $2000 damage to your car and have collision coverage with $500 deductible,which of the following statements is true?

A)Your insurance company will pay $2000 and your insurance premiums will go up $500.
B)You will pay $1500.
C)Your insurance company will pay $1500.
D)The other insurance company will pay $500 and your company will pay $1500.

Question 42

Which is the best advice about shopping for car insurance in provinces where there are private insurers?

A)Shop online for insurance before you start to shop for a car.
B)Ask friends and family where to get the best rates.
C)Ask at the car dealership while waiting for the delivery of your car.
D)Use the agent recommended by the car dealer as prices rarely vary.

Question 43

Auto insurance rates are based on all but your

A)vehicle use.
B)height and weight.
C)driving record.
D)sex.

Question 44

Which of the following is the appropriate action to take in the event of an accident?

A)If possible,move your car out of traffic and collect information using an accident checklist.
B)As long as no one is injured,remain in place and contact your insurance company to come and document the specifics so they can determine fault.
C)Contact the police immediately and stay where you are regardless of how minor the accident was.
D)If you feel the other driver might be guilty of a Criminal Code offence such as drunk driving,conduct a Citizen's arrest.

Question 45

Which of the following is true about pure no-fault insurance?

A)No one is deemed to be at fault when an accident occurs.
B)You cannot sue the at-fault driver for pain and suffering and economic loss.
C)It is the most cost effective insurance because there are no legal expenses.
D)The dollar value of accident benefits is much lower.

Question 46

Insurance agents who work for one Chaptericular company are called

A)company agents.
B)captive agents.
C)independent agents.
D)insurance brokers.

Question 47

Which of the following statements about uninsured motorist coverage is true?

A)This coverage applies to bodily injury when you are in an accident with an uninsured driver,regardless of who was at fault.
B)It does not apply to accidents caused by a hit-and-run driver.
C)It covers bodily injury when an accident is caused by another driver who is not insured.
D)It does not pay out when a driver who is at fault has an insurance company that goes bankrupt.

Question 48

Which of the following will reduce your insurance rate?

A)Decreasing your deductible
B)Paying all speeding tickets promptly
C)Driving antique classic cars
D)Increasing your deductible

Question 49

One of the advantages of no-fault automobile insurance is that

A)it does not use the legal system so the overall costs are much lower.
B)it results in higher jury awards to victims.
C)the injured receives immediate medical treatment through their own insurance.
D)the drivers who are at fault face no penalties for their risky behaviours.

Question 50

Comprehensive coverage would cover financial losses due to

A)damage to your car caused by a hit and run collision.
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)damage to a neighbour's fence caused by your car.

Question 51

Underwriters for an insurance company

A)calculate the risks of specific insurance requests from the public.
B)market insurance policies.
C)recommend insurance policies that fit customers' needs.
D)invest the premiums of policies to make their company a profit.

Question 52

Independent insurance agents,sometimes called brokers

A)work for just one insurance company.
B)represent many different insurance companies.
C)work for only two or three companies.
D)are self-employed and represent their own companies.

Question 53

Which of the following statements is true concerning comprehensive and collision insurance?

A)If you are financing a car,this insurance may be required by the lender.
B)Financially,it is advisable to take out the lowest deductible possible.
C)If you were in an accident,this coverage could enable you to replace your older car with a new one.
D)The deductible is really a form of transferring insurance.

Question 54

For auto insurance,which area has the highest level of insurance coverage required by law?

A)Comprehensive coverage
B)Accident benefits coverage
C)Uninsured motorist coverage
D)Third party liability coverage

Question 55

If you live in a province with private auto insurance,it can be very expensive if you

A)have a new car.
B)are a male under age 25.
C)have not taken a driver training course.
D)have an older car without air bags.

Question 56

Which section of auto insurance would pay for medical care for people who were injured in your automobile as a result of an accident that was your fault?

A)Accident benefits
B)Bodily injury liability coverage
C)Insured automobile coverage
D)Third party liability coverage

Question 57

Auto insurance rates are based on

A)whether or not you keep your car in the garage.
B)your marital status.
C)the number of kilometres and the type of driving you do each year.
D)the condition of your vehicle.

Question 58

In which of the following scenarios would your auto insurance coverage be in effect?

A)You have family protection coverage and are hit by an uninsured motorist.
B)You take your damaged car straight to your friend's autobody repair shop for repair.
C)You drive your parents' car without permission and get in an accident.
D)Insurance claims would be covered in all these scenarios.

Question 59

To significantly reduce your automobile insurance premiums and still have adequate coverage,you should

A)take the minimum levels of liability coverage.
B)raise the deductibles on comprehensive and collision.
C)waive medical payments coverage.
D)waive uninsured motorist coverage.

Question 60

Additional coverage on your automobile insurance policy can be purchased for

A)the cost of a rental car while you are having the oil changed.
B)the protection of valuables you are carrying in your car.
C)reupholstering a worn driver's seat.
D)repainting the vehicle before preparing to trade it in.

Question 61

You are in an accident which causes $3000 in damages to your car,and your policy has a $500 deductible for collision and $300 for comprehensive.If the other driver is at fault,which is correct?

A)You pay $500 deductible and claim it from the other driver's insurance company.
B)You pay $300 deductible and claim it from the other driver's insurance company.
C)Your insurance company covers the deductible.
D)You have to pay the deductible and can claim it back if you have an umbrella policy.

Question 62

Your insurance policy carries a $200 deductible for collision and $500 deductible for comprehensive.If you cause an accident which results in the following repairs and losses to your car and possessions,what will be the reimbursement from the insurance company under your collision and comprehensive coverage? • Replacement of trailer hitch $500
• Replacement of rear bumper $700
• Replacement of computer (in trunk) $400
• Replacement of rear windshield $400

A)$1400
B)$1800
C)$1500
D)nothing

Question 63

Ownership of assets such as cars,homes,and boats results in higher

A)liability risk.
B)physical risk.
C)real risk.
D)comprehensive risk.

Question 64

Which of the following would not be covered by liability portion of your homeowner's insurance?

A)Your dog bites a guest and the guest sues you.
B)While your accountant is visiting you,she trips on your carpet,breaks her leg and sues you.
C)Your neighbour sues you because you have a tree he feels will fall on his home and damage it.
D)An uninvited salesman walking up your sidewalk trips and falls and sues you.

Question 65

Jennifer rents an aChapterment and is considering tenant's insurance.Which of the following is accurate about what Jennifer can expect to get coverage for in a standard cash value tenant's insurance policy with a $500 deductible?

A)Coverage for the diamond ring she inherited from her grandmother and keeps hidden.
B)Coverage for her brother's antique car,which got damaged by hail in her back yard.
C)Coverage for her laptop,which she purchased a year ago for $500 and was stolen.
D)Coverage for smoke damage to her furniture.

Question 66

Consider the loss from fire damage of furniture which cost $6000 thee years ago and has an expected life of ten years.This furniture would cost $9000 to purchase today.Under a replacement cost policy,how much would the insurance company pay you for this loss?

A)$6000
B)$9000
C)$4200
D)$6300

Question 67

Most standard home insurance policies provide coverage for

A)earthquake damage.
B)liability.
C)flood damage.
D)computers.

Question 68

Which of the following is true of tenants insurance?

A)You only need to buy it if you have possessions of considerable value.
B)It will not cover you if a visitor sues you for an injury received in your apartment.
C)It covers only your own property,not the property of your landlord.
D)Because premiums are low,most people who need it have renter's insurance.

Question 69

Which of the following is true about liability insurance in a homeowner's policy?

A)The amount of coverage you select should not be tied to the value of your home.
B)It would pay for temporary housing while your home is repaired due to covered damage.
C)It would reimburse a homeowner for damage done by a visitor.
D)It would not cover you for a skiing accident where you cause injury to someone else.

Question 70

Your home insurance provides for replacement value for personal property losses.If your china hutch (ten year depreciation)was vandalized and completely destroyed and cost $400 four years ago,but a new one will cost $600,how much will the insurance company pay?

A)$400
B)$240
C)$600
D)Nothing,vandalism is not covered.

Question 71

A 46-inch HDTV originally purchased for $5000 has a life expectancy of seven years.It is five years old and has been destroyed in a fire.Today a similar TV would cost $2100.Your cash value policy will

A)pay you $2100 to replace it with a similar model available now.
B)pay you the $5000 original purchase price.
C)pay you $1429 as settlement in full.
D)pay you the accumulated depreciation value of $3571.

Question 72

In order to have an umbrella personal liability policy

A)you must have existing auto insurance.
B)you must have existing homeowner's insurance.
C)you must have both existing auto and homeowner's insurance.
D)you must prove your insurability.

Question 73

What is the best advice when considering how much third Chaptery liability insurance coverage to purchase?

A)At least $1 million coverage
B)The provincially required amount
C)$500 000 coverage
D)As much as you can afford

Question 74

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

A)insure your home for 60 percent of its value.
B)drop coverage for medical payments.
C)increase deductibles.
D)eliminate liability coverage.

Question 75

What is the name of the document which needs to be completed for additional personal property insurance not adequately covered by your homeowner's policy?

A)A general liability agreement
B)A personal property floater
C)Extra value full replacement rider
D)An endorsement

Question 76

You are not at fault in a car accident that causes you total damages for injuries and lost employment in the amount of $550 000.If you have under insured motorist coverage and the other driver who is at fault has coverage for $500 000,what will you be able to claim?

A)The other driver's insurance company will pay $550 000.
B)Your auto insurance company will cover $550 000.
C)The other driver's insurance company will pay $500 000 and your health coverage will pay $50000
D)The other driver's insurance company will pay $500 000 and your auto insurance will pay $50000

Question 77

You have cash value coverage for your personal property on your homeowner's policy.Your camera cost $300 eight years ago had a life expectancy of 10 years.The camera was stolen,and a new one will cost $100.How much will the insurance company pay?

A)$60
B)$100
C)$200
D)$300

Question 78

How much coverage would be provided under a standard homeowner's cash value policy which deems furniture to be fully depreciated in ten years,if your antique dresser from the 1860s is destroyed by fire? You purchased the dresser eleven years ago for $1300 and it was recently appraised at $2600,and you have an offer from an antique collector to purchase it for $3100.

A)$0
B)$1300
C)$2600
D)$3100

Question 79

Which of the following actions is a suggestion to reduce your homeowner's insurance?

A)Install better locks or a security system.
B)Make prompt small claims against your policy.
C)Eliminate your deductible all together.
D)Decrease your liability coverage.

Question 80

Your home insurance policy has a $500 deductible and provides cash value coverage on contents.If your home is over 25 years old and a small fire causes $6000 damage to it,what amount of the claim would the insurance company pay?

A)$500
B)$5500
C)$6000
D)None because the home is over 25 years old