Deck 8: Home and Automobile Insurance

Question 1

An example of a hazard is defective house wiring.

Answer 1

True

Question 2

A homeowner policy provides coverage for additional living expenses after a fire.

Answer 2

True

Question 3

An example of a peril is defective wiring.

Answer 3

False

Question 4

A landlord is responsible for paying renter's insurance.

Question 5

Insurance is protection against possible financial loss.

Question 6

The National Flood Insurance Program makes flood and earthquake insurance available for all homeowners.

Question 7

Samuel should buy insurance in order to eliminate his risk.

Question 8

Robby fell on some ice on Peter's front steps and broke his arm.This is an example of a risk covered by the personal liability portion of Peter's homeowner's policy.

Question 9

Risk management is an organized plan for protecting yourself,your family,and your property.

Question 10

A household inventory should be stored in a home office.

Question 11

Once a risk management plan is in place,the insurance programs that were set up should remain the same even as family needs change.

Question 12

Risk avoidance is an organized plan for protecting yourself,your family,and your property.

Question 13

An example of a peril is a robbery.

Question 14

The first step to setting up an insurance program is to set insurance goals.

Question 15

An important question that should be asked when setting up an insurance program is "What do I need to insure?
"

Question 16

Homeowner's insurance excludes detached structures.

Question 17

Caroline was found liable in an accident.This was probably not due to negligence on her part.

Question 18

Jim and Sandy are setting up their insurance program.One of their goals should be to reduce the possible loss of income due to fire or theft.

Question 19

An insurance claim is a request for payment to cover financial losses.

Question 20

Another name for a homeowner's insurance policy is an umbrella policy.

Question 21

Uninsured motorist's protection automatically covers you and your family members as well as damage to the vehicle itself.

Question 22

Every state in the United States has a law requiring people to carry motor vehicle insurance.

Question 23

Mortgage lenders require that homeowners purchase home insurance.

Question 24

Insurance coverage for a rental is more expensive than insurance coverage for a mobile home.

Question 25

An individual who purchases insurance is

A) The insurance company.
B) A policyholder.
C) An insurer.
D) A victim.
E) An employer.

Question 26

If you need information to compare Acme Home Insurance and Zebra Home Insurance,you should contact the state insurance commissioner or a consumer organization that deals with insurance.

Question 27

Motor vehicle insurance falls into two categories: protection for bodily injury and protection for property damage.

Question 28

An assigned risk pool is a method of calculating the insurance premiums for various groups of drivers.

Question 29

Collision insurance covers your vehicle against risks such as falling objects and hail.

Question 30

Emergency road service coverage includes coverage for a tow to a service station as well as repairs to make the vehicle drivable.

Question 31

It is illegal to use a credit score to determine the premium to charge an individual.

Question 32

If you live in a city,you should expect to pay a higher premium for your auto insurance than someone who lives in a rural area.

Question 33

Sam's house should be insured for the amount he originally paid for it.

Question 34

One way to keep auto insurance rates down is to insure each vehicle you own with a different insurer.

Question 35

What is the fee that a policyholder pays when an insurance company agrees to take on the risk?

A) Coverage
B) Insured
C) Premium
D) Peril
E) Risk

Question 36

If you drive a model of vehicle that is frequently stolen,you should expect to pay a higher premium for your auto insurance.

Question 37

The actual cash value method of settling claims is based on the replacement cost of an item less depreciation.

Question 38

Angela should decrease her deductible from $1,000 to $250 in order to reduce her home insurance premium.

Question 39

Insurance allows someone to

A) Reduce risk.
B) Assume risk.
C) Shift risk.
D) Avoid risk.
E) Eliminate risk.

Question 40

A brick home should usually cost less to insure than a similar structure made of wood.

Question 41

Barbara left a skateboard on her front steps.Her neighbor tripped on the skateboard and was injured.The fact that Barbara didn't put away the skateboard is called

A) Hazard.
B) Negligence.
C) Peril.
D) Premium.
E) Risk.

Question 42

If you choose to take responsibility for negative results of a risk,you are using

A) Risk avoidance.
B) Risk reduction.
C) Risk assumption.
D) Risk shifting.
E) Risk increasing.

Question 43

Barbara left a skateboard on her front steps.Her neighbor tripped on the skateboard and was injured.The skateboard was a

A) Hazard.
B) Negligence.
C) Peril.
D) Premium.
E) Risk.

Question 44

Barbara left a skateboard on her front steps.A windstorm swept the skateboard up and through her window.The windstorm was a

A) Hazard.
B) Negligence.
C) Peril.
D) Premium.
E) Risk.

Question 45

The most common risks are

A) Personal risks.
B) Property risks.
C) Liability risks.
D) All of these are common risks.
E) None of these are common risks.

Question 46

Which of the following is NOT one of the commonly used general risk management techniques?

A) Reduce risk
B) Assume risk
C) Shift risk
D) Avoid risk
E) Increase risk

Question 47

Homeowner's insurance covers all of the following except

A) A detached garage.
B) Trees and shrubs.
C) A tool shed.
D) Personal property.
E) All of these are covered.

Question 48

If you choose to insure your home or your vehicle,you are using

A) Risk avoidance.
B) Risk reduction.
C) Risk assumption.
D) Risk shifting.
E) Risk increasing.

Question 49

Which of the following is correct?

A) The best risk management plan is constant through one's life.
B) Once a plan is set up, it should be reviewed every 10 years.
C) A solid risk management plan works well without insurance as a component.
D) One question that should be asked when developing a risk management plan is "What do I need to insure?"
E) The main goal of insurance should be to maximize personal, property, and liability risks.

Question 50

Anything that may possibly cause a loss is called a

A) Hazard.
B) Negligence.
C) Peril.
D) Premium.
E) Speculation.

Question 51

Homeowner's insurance covers all of the following except

A) Personal property.
B) Personal liability.
C) Additional living expenses.
D) Automobiles.
E) Building and other structures on the property.

Question 52

An insurance program

A) Should be constant through one's life.
B) Should change along with needs and goals.
C) Should minimize personal property and liability risks.
D) Should be constant through one's life, and should minimize personal property and liability risks.
E) Should minimize personal property and liability risks, and change along with one's needs and goals.

Question 53

The failure to take ordinary or reasonable care to prevent accidents from happening is called

A) Hazard.
B) Negligence.
C) Peril.
D) Premium.
E) Risk.

Question 54

Liability is defined as

A) An insurance program for individuals and households.
B) The legal responsibility for the financial cost of another person's losses or injuries.
C) Negligence.
D) A loss due to physical damage.
E) Risk assumption.

Question 55

Which of the following questions should one ask when developing a risk management plan?

A) What do I need to insure?
B) How much should I insure something for?
C) What kind of insurance should I buy?
D) Whom should I buy insurance from?
E) All of these questions should be asked when developing a risk management plan.

Question 56

If you choose to wear your seatbelt,you are using

A) Risk avoidance.
B) Risk reduction.
C) Risk assumption.
D) Risk shifting.
E) Risk increasing.

Question 57

Homeowner's insurance covers all of the following except

A) Three months in a hotel after a house fire.
B) Theft of a diamond necklace valued at $25,000.
C) A three-year-old television.
D) A fire that damages your neighbor's roof that was caused by a spark from your grill.
E) Medical costs for a visitor who slipped on your steps and broke his ankle.

Question 58

An insurance company will

A) Insure speculative and pure risks.
B) Insure pure risk, but not speculative risk.
C) Insure neither pure risk nor speculative risk.
D) Insure speculative risk, but not pure risk.
E) Insure all types of risks.

Question 59

The two basic types of risk that people face regarding their personal property are

A) Basic and criminal.
B) Physical damage and destruction.
C) Destruction and basic.
D) Physical damage and damage caused by criminal behavior.
E) Negligence and criminal behavior.

Question 60

If you choose to avoid the risk of a traffic accident by not driving to work,you are using

A) Risk avoidance.
B) Risk reduction.
C) Risk assumption.
D) Risk shifting.
E) Risk increasing.

Question 61

Sandra is contacting several insurance companies to compare coverage for her home.Which of the following should NOT affect her premium?

A) Alarm system
B) Amount of coverage
C) Type of structure
D) Deductible
E) Proximity to a school

Question 62

Homeowner's insurance includes all of the forms listed here except

A) HO-1.
B) HO-2.
C) HO-5.
D) HO-6.
E) HO-8.

Question 63

When Stanley was visiting Elaine,he tripped on her front porch step and sprained his ankle.His injuries were covered by

A) Elaine's medical payments coverage.
B) Stanley homeowner's policy.
C) Elaine's health insurance coverage.
D) Elaine's life insurance policy.
E) The insurance policy of the mason who installed the front porch step 15 years ago.

Question 64

Yogi is applying for insurance for his new home.Which of the following is correct?

A) He should base the amount of insurance on the price to rebuild or repair it.
B) He should insure the building for 75% of its replacement cost.
C) He should use the actual cash value method for settling claims to receive the full cost of repairing or replacing his personal belongings.
D) His personal belongings should automatically be covered with his home at 125% of his home's insured amount.
E) His insured amount should remain the same as long as he lives in his house.

Question 65

The best place to keep a household inventory is

A) On a bookshelf in the family room.
B) In the freezer.
C) In the attic.
D) In a safe deposit box.
E) In the garage.

Question 66

Cindy was contacted by her home insurance agent to discuss ways to decrease her premium.Which of the following should NOT reduce her premium?

A) Installing an alarm system.
B) Increasing the amount of coverage.
C) Installing smoke detectors or a fire extinguisher.
D) Increasing her deductible.
E) All of these should reduce her premium.

Question 67

A policy that supplements your basic personal liability coverage is called a(n)

A) Endorsement.
B) Homeowner's insurance.
C) Medical payments coverage.
D) Supplementary policy.
E) Umbrella policy.

Question 68

Personal liability coverage does NOT protect

A) An occasional babysitter.
B) The homeowner.
C) A visitor.
D) Members of the homeowner's family.
E) A housekeeper.

Question 69

Motor vehicle crashes cost more than ______ in lost wages and medical bills every year.

A) $10,000
B) $750,000
C) $12 million
D) $150 billion
E) $2 trillion

Question 70

Home insurance policies include coverage for all of the following except

A) Credit card fraud.
B) The cost of removing damaged property.
C) Temporary repairs after a loss to prevent further damage.
D) Business property.
E) Emergency removal of property to protect it from damage.

Question 71

If you have a loss due to a flood,

A) Your homeowner's insurance should normally cover the loss.
B) You need to have purchased special coverage if you live in an area that has frequent floods in order to be covered.
C) FEMA (Federal Emergency Management Agency) will automatically provide coverage if this is your second flood loss.
D) You need an umbrella policy for coverage.
E) Your additional living expenses coverage will apply if you move to an area that has not flooded in one year.

Question 72

Barnaby is applying for insurance for his new home.Which of the following is correct?

A) He should base the amount of insurance on the price he paid for it.
B) He should insure the building for 75% of its replacement cost.
C) He should use the actual cash value method for settling claims to receive the full cost of repairing or replacing his personal belongings.
D) His personal belongings should automatically be covered with his home at 125% of his home's insured amount.
E) His policy should automatically increase coverage as construction costs rise.

Question 73

Andrew is applying for insurance for his new home.Which of the following is correct?

A) He should base the amount of insurance on the price he paid for it.
B) He should insure the building for 75% of its replacement cost.
C) He should use the replacement value method for settling claims to receive the full cost of repairing or replacing his personal belongings.
D) His personal belongings should automatically be covered with his home at 125% of his home's insured amount.
E) His insured amount should remain the same as long as he lives in his house.

Question 74

Zach is applying for insurance for his new home.Which of the following is correct?

A) He should base the amount of insurance on the price he paid for it.
B) He should insure the building for its replacement value to receive the full cost of repairing or replacing it.
C) He should use the actual cash value method for settling claims to receive the full cost of repairing or replacing his personal belongings.
D) His personal belongings should automatically be covered with his home at 125% of his home's insured amount.
E) His insured amount should remain the same as long as he lives in his house.

Question 75

Tom wanted to receive as many discounts on his home insurance as possible.Which of the following would NOT provide a discount?

A) Smoke detector.
B) Fire extinguisher.
C) Deadbolt locks.
D) Alarm systems.
E) All of these should provide a discount for Tom.

Question 76

Vincent is applying for insurance for his new home.Which of the following is correct?

A) He should base the amount of insurance on the price he paid for it.
B) He should insure the building for 75% of its replacement cost.
C) He should use the actual cash value method for settling claims to receive the full cost of repairing or replacing his personal belongings.
D) His personal belongings should automatically be covered with his home at 55-75% of his home's insured amount.
E) His insured amount should remain the same as long as he lives in his house.

Question 77

Which of the following is NOT correct about renter's insurance?

A) The broad form covers personal property against perils specified in the policy.
B) Renter's insurance covers the building and other structures on the site.
C) The comprehensive form protects personal property against perils not specifically excluded in the policy.
D) Typical coverage pays only the actual cash value of one's losses.
E) Renter's insurance includes personal property protection, additional living expenses, and personal liability.

Question 78

Insurance that covers valuable items,such as an expensive harp,is called

A) Buildings and other structures coverage.
B) Homeowner's insurance.
C) Personal property floater.
D) Household inventory insurance.
E) Personal property insurance.

Question 79

Personal property insurance covers

A) All personal property.
B) Furniture and appliances, but not clothing or some electronics.
C) Clothing and some electronics, but not furniture and appliances.
D) All items up to 200% of the insured value of the home.
E) Personal property items up to 55-75% of the insured value of the home.

Question 80

All of the following are acceptable types of documentation for a household inventory except

A) Photographs with dates purchased and values of objects listed on the backs.
B) Video recordings of assets.
C) Written listings of items, purchase prices, and assets.
D) Computerized spreadsheets with details about the items and their ages and costs.
E) A listing of items and their details in your memory.