Deck 10: Protecting Your Property

Question 1

Floods are covered under most homeowner's insurance policies.

Answer 1

False

Question 2

Never discuss liability at the scene of an accident or with anyone other than the police and your insurer.

Answer 2

True

Question 3

A homeowner's policy not only covers the persons named in the policy but also family members who live in the insured's home.

Answer 3

True

Question 4

Collision insurance covers the damage caused to your automobile when you are at fault in an accident.

Question 5

The type of car you drive has little effect on your auto insurance premiums.

Question 6

Actual cash value is defined as replacement cost minus depreciation.

Question 7

A $100,000/$300,000 bodily injury liability automobile policy could pay up to $100,000 to one person or up to $300,000 to all injured victims in an accident.

Question 8

The federal government has established a subsidized flood insurance program for homeowners and tenants living in designated communities.

Question 9

A captive agent typically represents 2 to 10 different insurance companies.

Question 10

Increasing the amount of the deductible is the only way to reduce the cost of homeowner's insurance.

Question 11

The premiums for homeowner's insurance policies are affected by the type of structure and its location.

Question 12

A personal property floater (PPF) and a personal liability umbrella policy offer similar coverage.

Question 13

Uninsured motorists protection usually provides protection to the insured's car if a hit-and-run incident occurs.

Question 14

Property inventories are important to identify insurance needs and to substantiate claims.

Question 15

If you lease a car, you'll most likely be required to have physical damage coverage.

Question 16

The principle of indemnity states that the insured cannot be compensated for an amount exceeding the insured's economic loss.

Question 17

State financial responsibility laws require only automobile liability insurance.

Question 18

Each type of property damage coverage is subject to a deductible of $100 or more.

Question 19

Homeowner's co-insurance requires the insured to carry insurance protection equal to the market value of the house.

Question 20

Suppose you carelessly, but unintentionally, knocked someone down a flight of stairs in your home. You would be covered by your homeowner's insurance.

Question 21

Standard homeowner's policies will not include coverage for damage done by:

A) fire.
B) flood.
C) lightning.
D) wind.
E) glass breakage.

Question 22

The principle of indemnity will prevent:

A) the act of one person being assigned to another.
B) an insured from collecting more than what he or she has lost.
C) a negligent third party from being held liable for damages if the injured party is insured.
D) a significant amount of loss control activity.
E) an insurer from ever waiving its right to subrogation.

Question 23

Section II of a homeowner's insurance policy covers:

A) hospitalization costs for the insured.
B) damages caused by a covered peril.
C) living expenses while an insured's house is repaired.
D) paying successfully pursued liability claims against an insured.
E) damages caused by people renting the property.

Question 24

The _____ is a good homeowner's policy for a condominium owner.

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

Question 25

If you have two insurance policies on the same property, the _____ explains how the two insurance companies will share the loss.

A) co-insurance clause
B) personal property floater (PPF)
C) right of subrogation
D) other-insurance clause
E) principle of indemnity

Question 26

Which of the following homeowner's policies is best suited to a renter of an apartment?

A) HO-1
B) HO-2
C) HO-3
D) HO-4
E) HO-8

Question 27

Which of the following obligations do most property insurance contracts impose on the property owner?

A) Identify the perils against which protection is needed.
B) Divide and classify belongings as " personal property " and " business property. "
C) Complete a property inventory and designate a future value to each item listed in the inventory.
D) Arrange for a real estate appraiser to determine the value of the property.
E) Provide information related to previous rental history and claim history.

Question 28

The personal property floater (PPF):

A) provides either blanket or scheduled coverage of items that are not covered adequately in a standard homeowner's policy.
B) is available to meet the needs of "innocent" victims of accidents who are negligently injured by uninsured, underinsured, or hit-and-run motorists.
C) is a specialized inland marine policy covering boats and trailers used with boats.
D) covers against liability caused by the ownership or use of items of personal property.
E) is an additional amount of insurance equal to a specified percentage of the replacement value of the property.

Question 29

Which of the following homeowner's policies provides coverage for damage caused by electrical current?

A) HO-7
B) HO-2
C) HO-8
D) HO-9
E) HO-1

Question 30

A higher home insurance cost may result from:

A) a low crime rate in the area of the insured's residence.
B) a low credit score of the insured.
C) fewer insurance claims from the area of the insured's residence.
D) the lack of a swimming pool at the insured's residence.
E) fewer captive agents hired by the insurance company.

Question 31

An increase in the amount of the deductible will:

A) increase the insurance coverage.
B) decrease the replacement cost of the insured property.
C) decrease the amount of insurance premiums.
D) increase the personal property floater (PPF) coverage for the insured property.
E) decrease the value of the property.

Question 32

A homeowner's policy does not provide protection for:

A) the personal property of family members at home.
B) the personal property of family members who are in college.
C) a business unit's property valued below $2,500 while it is on the insured premises.
D) the personal property of tenants.
E) the personal property of family members who are traveling.

Question 33

Auto insurance is needed primarily:

A) to finance automobile maintenance.
B) as protection against the cost of significant loss.
C) as a part of the homeowner's insurance requirements.
D) to counter the effects of increasing fuel prices.
E) to satisfy federal requirements for a lawful citizenship.

Question 34

Which of the following homeowner's policies provides coverage for the damage caused by the accidental discharge of water or steam?

A) HO-7
B) HO-2
C) HO-8
D) HO-9
E) HO-1

Question 35

Negligence occurs when someone:

A) is not insured.
B) fails to act as an insured.
C) fails to act in a reasonable manner.
D) admits an error.
E) causes an unintentional accident.

Question 36

Section I of a homeowner's insurance policy covers:

A) the cost of defending the insured.
B) the reasonable expenses incurred by an insured in helping the insurance company's defense.
C) hospitalization costs provided to the insured.
D) the dwelling, accompanying structures, and personal property of the insured.
E) the liability for negligence of the insured.

Question 37

Even though homeowners are eligible for reimbursement on a full replacement-cost basis if they keep their homes insured for at least 80% of the amount that it would cost to build them today, _____ can cause the actual amount of coverage to fall below 80%.

A) the replacement cost
B) inflation
C) the insurance premium
D) deductibles
E) the land value

Question 38

Which of the following is a basic, seldom-used homeowner's policy with relatively narrow coverage?

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

Question 39

Part A liability coverage under a personal automobile policy may be viewed as "following" the _____ first.

A) insured
B) family members of the insured
C) holder of an auto loan
D) vehicle
E) insurer

Question 40

Replacement-cost coverage is the reimbursement of:

A) the cost of repairing or replacing damaged structures without deducting for depreciation.
B) reasonable living expenses while the insured's house is being repaired.
C) the cost of damages caused by perils other than those mentioned in the policy.
D) the cost of defending the insured.
E) the increase in the deductible to reduce the amount of the insurance premium.

Question 41

INSTRUCTIONS: Choose the word or phrase in [ ] that will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
Property insurance companies require you to show [ proof of loss | a personal property inventory ] when making a claim.

Question 42

INSTRUCTIONS: Choose the word or phrase in [ ] that will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
Section I of a homeowner's insurance policy covers [ medical payments to others | the dwelling of the insured ].

Question 43

Comprehensive automobile coverage refers to:

A) complete coverage including liability, medical payments, and damage to the automobile.
B) coverage for damage to an insured automobile from perils (with a few exceptions) other than collision.
C) coverage that adds items of personal property, such as CB radios and telephones, that are ordinarily excluded.
D) coverage for bodily injuries suffered in an automobile accident.
E) coverage for damage due to a multi-car collision.

Question 44

Which of the following statements regarding factors that influence how auto insurance premiums are set is true?

A) Insurance companies charge lower rates for rear-engine models.
B) Rates are lower if the insured automobile is driven less than 20 miles one way to work.
C) In most states, accidents determined to be the insured's fault incur points and a premium surcharge.
D) Discounts are often given for a vehicle that is driven less than 100,000 miles a year.
E) Because they are involved in a larger percentage of fatal crashes, unmarried females under age 30 pay higher premiums than do older individuals.

Question 45

At the scene of an accident, the police are only responsible for assessing the:

A) amount of loss.
B) amount of the claim.
C) liability of the insurance company.
D) probability of a law violation.
E) extent of any injuries.

Question 46

INSTRUCTIONS: Choose the word or phrase in [ ] that will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
Bill was the at-fault party when you and he collided. Your insurance company has paid for the damages to your car. Now, it intends to recover this money from Bill. This is the right of [ subrogation | indemnification ].

Question 47

The best way to buy automobile insurance is through a(n):

A) insurance agent.
B) state insurance commission.
C) auto dealer.
D) finance company.
E) bank.

Question 48

Which of the following statements regarding medical payments coverage in a personal automobile policy (PAP) is true?

A) Medical payments coverage insures a covered individual for medical expenses incurred within 5 years of an automobile accident in an amount not to exceed the policy limit.
B) A person must be occupying an automobile when the accidental injury occurs to be eligible for benefits.
C) Medical payments coverage provides for reimbursement even if other sources of recovery, such as health insurance or accident insurance, also makes payments.
D) In all states, medical payments are subject to subrogation, which means the insurer is entitled to recover any duplicate payments made to the insured.
E) Injuries sustained on a bicycle or motorcycle in a traffic accident are covered.

Question 49

It pays to comparison shop for insurance policies because of the:

A) subsidized deductible options.
B) different educational qualifications of captive agents.
C) large variations in premiums and services.
D) different legal liabilities of insurance agents.
E) high cost of insurance.

Question 50

Donna, who is single and 30 years old, received several speeding tickets recently and was shocked by the effect they had on her auto insurance. Donna drives a 2017 Pontiac Firebird. She is currently not covered by health insurance, has an emergency fund of $25,000, an income of $100,000 per year, and an investment portfolio of $230,000. She is trying to reduce the price of her auto insurance. Which of the following actions is most likely to help Donna reduce the price of her auto insurance?

A) Maintaining her liability limits at current levels
B) Raising her medical payments coverage
C) Raising her deductible from $250 to $1,000
D) Maintaining her collision coverage at current levels
E) Raising her collision coverage by $10,000

Question 51

INSTRUCTIONS: Choose the word or phrase in [ ] that will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
Liability insurance [ provides | does not provide ] coverage for legal fees if you are required to defend yourself in a lawsuit.

Question 52

To purchase a personal liability umbrella policy, the insured party must already have:

A) federally subsidized flood insurance coverage.
B) relatively high liability limits on their homeowner's and auto coverage.
C) high levels of personal debt.
D) made several claims with the insurance company.
E) a poor driving record.

Question 53

John owns a 1998 Toyota Camry that has a value of $775. In order to save some money, he has decided not to purchase _____ as part of his personal automobile policy (PAP).

A) Part A
B) Part B
C) Part C
D) Part D
E) Part E

Question 54

An insured does not get the right to arbitration when the:

A) insurance company denies responsibility for the loss.
B) loss is of a relatively small value.
C) claim is assigned to a claims adjustor.
D) insured leaves the scene of the accident.
E) insured has made several claims from the insurance company.

Question 55

An insurance company usually assigns more complex loss cases to a:

A) captive insurance agent.
B) claims adjustor.
C) Chartered Property and Casualty Underwriter (CPCU).
D) Certified Insurance Counselor (CIC).
E) court investigator.

Question 56

A captive agent is a(n):

A) insurance agent who represents only one insurance company.
B) federal insurance agent who can sell low-cost flood insurance coverage.
C) independent agent who can insure homeowners and tenants together for flood insurance.
D) insurance agent who insures only homes and vehicles.
E) claims adjustor who assesses the probability of law violations during an investigation.

Question 57

A(n) _____  agent represents multiple insurance companies.

A) captive
B) business
C) casualty
D) independent
E) dealer's

Question 58

INSTRUCTIONS: Choose the word or phrase in [ ] that will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
Most homeowner's insurance policies [ include | exclude ] damage or loss caused by the backing up of sewers and drains.

Question 59

The first step when buying property and liability insurance is to develop a(n):

A) list of insurance agents offering insurance.
B) inventory of exposures to loss.
C) statement of premiums of five different insurance companies.
D) list of floater policies.
E) replacement cost for your property.

Question 60

A personal liability umbrella policy:

A) may include subsidies for flood insurance established in cooperation with a private insurance agent.
B) provides added liability coverage for homeowner's and automobile insurance.
C) provides the maximum protection available for virtually all the insured's personal property.
D) typically includes the basic health and homeowner's protection needed by most families.
E) is recommended for persons with low to moderate levels of income and net worth.

Question 61

INSTRUCTIONS: Choose the word or phrase in [ ] that will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
Buying collision and comprehensive auto insurance from the dealer selling you the car is considered to be a [ good | bad ] idea.

Question 62

INSTRUCTIONS: Choose the word or phrase in [ ] that will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
Uninsured motorist insurance is relatively [ expensive | inexpensive ].

Question 63

INSTRUCTIONS: Choose the word or phrase in [ ] that will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
Medical payments coverage [ would | would not ] pay for the medical bills of passengers in your car who are not related to you.

Question 64

INSTRUCTIONS: Choose the word or phrase in [ ] that will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
Section II of a homeowner's insurance policy covers [ personal property | personal liability of the insured ].

Question 65

INSTRUCTIONS: Choose the word or phrase in [ ] that will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
The scope of coverage under Section I is greatest with an [ HO-1  | HO-5 ] policy.

Question 66

INSTRUCTIONS: Choose the word or phrase in [ ] that will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
[ HO-2 | HO-3 ] is an example of a named peril policy.

Question 67

INSTRUCTIONS: Choose the word or phrase in [ ] that will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
Drivers aged 25 and under are involved in nearly [ 30% | 50% ] of auto accidents.

Question 68

INSTRUCTIONS: Choose the word or phrase in [ ] that will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
Compulsory auto insurance laws require motorists to show evidence of insurance [ before receiving their license plates | only after being involved in an accident ].

Question 69

INSTRUCTIONS: Choose the word or phrase in [ ] that will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
If your furniture in your rented apartment is destroyed by a fire, it [ would | would not ] be covered by your landlord's policy.

Question 70

INSTRUCTIONS: Choose the word or phrase in [ ] that will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
If a rock thrown from a semi-truck cracks the windshield on your car, payment will come from your [ collision | comprehensive ] protection.

Question 71

INSTRUCTIONS: Choose the word or phrase in [ ] that will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
The personal property of your [ boarder | visiting mother-in-law ] would be covered by your homeowner's policy.

Question 72

INSTRUCTIONS: Choose the word or phrase in [ ] that will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
The professional designation you want your property insurance agent to have is the [ ACLU | CPCU ].

Question 73

INSTRUCTIONS: Choose the word or phrase in [ ] that will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
A personal liability umbrella policy is designed to [ replace | supplement ] homeowner's and auto insurance liability coverage.

Question 74

INSTRUCTIONS: Choose the word or phrase in [ ] that will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
[ Comprehensive | Named peril ] policies cover all perils unless they are specifically excluded.

Question 75

INSTRUCTIONS: Choose the word or phrase in [ ] that will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement.
Allstate and Nationwide are major insurance companies that market their products through [ captive | independent ] agents.