Deck 8: Home and Automobile Insurance

Question 1

Most home insurance policies provide coverage for

A) earthquake damage.
B) flood damage.
C) an umbrella liability.
D) basic personal liability.
E) medical payments.

Answer 1

medical payments.

Question 2

While cleaning your home, a worker damages some furniture. You take action against the worker's employer to cover the cost of the damage. This is an example of a(n) ____________ liability.

A) umbrella
B) assigned
C) common situation
D) peril
E) vicarious

Answer 2

vicarious

Question 3

Which of the following are not covered by tenant's insurance?

A) medical expenses for injuries to visitors
B) fire damage of the building's roof
C) additional living expenses
D) accidental damage to the property of others
E) cost of legal action due to personal liability

Answer 3

fire damage of the building's roof

Question 4

Peril is defined as

A) the refusal by an insurance company to pay for the covered loss.
B) the cause of risk.
C) the cause of a possible loss.
D) an uncertainty as to loss.
E) risk

Question 5

Vicarious liability refers to

A) failure to take ordinary and reasonable care.
B) when a person is held responsible for actions of another person.
C) property damage.
D) high risk insurance coverage.
E) common hazards in our society.

Question 6

Your home insurance provides for replacement value for personal property losses. A microwave is stolen. It cost $300 two years ago and has an expected life of six years. A comparable microwave costs $200 today. What amount will the insurance company pay?

A) $100
B) $150
C) $200
D) $350
E) $300

Question 7

Defective house wiring is an example of a

A) hazard.
B) peril.
C) risk.
D) speculation.
E) negligence.

Question 8

The ____________ coverage of a home insurance policy would cover accidental damage to another person's property by a member of your family.

A) voluntary property damages
B) personal property
C) medical payments
D) additional living expenses
E) personal liability

Question 9

The additional living expenses component of a home insurance policy is designed to

A) pay for temporary housing while your home is repaired.
B) cover damage to property while away from home.
C) reimburse a homeowner for damage done by a visitor.
D) pay for medical expenses of people injured on your property.
E) pay for repairs caused by fire or other hazards.

Question 10

Which of the following would be covered by a home insurance policy?

A) earthquake damage
B) flooding
C) brush fires
D) wind damage to your roof
E) theft of business supplies from your office

Question 11

The legal responsibility for the financial cost of another person's losses or injuries is referred to as

A) theft.
B) robbery.
C) liability.
D) assigned risk.
E) collusion.

Question 12

An umbrella policy is designed to cover

A) expensive personal property.
B) additional buildings on your property.
C) property when traveling away from home.
D) flood damage
E) major personal liability suits.

Question 13

High winds cause damage to trees, shrubs, and other plants. This insurance claim would be covered under the ____________ component of homeowner's insurance.

A) additional living expenses
B) personal property
C) building and other structures
D) personal liability
E) property damage

Question 14

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

A) an automobile
B) a garage
C) a house
D) appliances
E) trees and shrubs

Question 15

Tenant's insurance would include coverage for all of the following except

A) additional living expense coverage.
B) personal liability.
C) building and other structures.
D) personal property.
E) protection against financial loss due to damage.

Question 16

Georgette Valentine has expensive photography equipment for use in her hobby. Which coverage from the following list would pay for damage or theft of this equipment?

A) an umbrella policy
B) a household inventory
C) additional living expense coverage
D) a personal articles endorsement
E) a coinsurance floater

Question 17

The purpose of a household inventory is to

A) reduce insurance costs.
B) lower the chance of negligence
C) obtain personal property floater coverage.
D) increase liability coverage.
E) verify owned property.

Question 18

If a homeowner leaves toys on stairs that result in injury to a delivery person, this may be ruled as

A) vicarious liability.
B) negligence.
C) assigned risk.
D) umbrella coverage.
E) coinsurance.

Question 19

Purchasing a technology stock that may or may not increase in price is an example of ___________ risk.

A) speculative
B) pure
C) commercial
D) personal
E) liability

Question 20

The uncertainties of direct and indirect losses due to fire, wind, accident, theft, etc., are called ____________ risks.

A) personal
B) business
C) property
D) liability
E) speculative

Question 21

Which of the following factors is used to determine a person's driver classification?

A) Age
B) Type and age of vehicle
C) Claims in your geographic area
D) Insurance company claim processing costs
E) State insurance premium regulations

Question 22

Which of the following insurance policy provisions requires that the insured must pay for part of the loss of a claim if the property is not insured for the specified percentage of replacement value?

A) personal property floater
B) an endorsement
C) assigned risk clause
D) umbrella coverage
E) coinsurance clause

Question 23

Comprehensive coverage would cover financial losses due to

A) injuries caused by a driver without insurance.
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) legal action against you for an accident.
E) damage to a neighbor's tree with your car.

Question 24

Wind damage occurs to your car costing $1,000 to repair. If you have a $300 deductible for collision and full coverage for comprehensive, what portion of the claim will the insurance company pay?

A) $300
B) $1,300
C) $500
D) $700
E) $800

Question 25

Which of the following coverage's would pay for medical care for people who were injured in your automobile?

A) comprehensive
B) bodily injury liability
C) collision
D) accident benefits
E) no-fault insurance

Question 26

A system that allows insurance companies to provide coverage to several individuals with poor driving records is referred to as

A) no-fault insurance.
B) an assigned risk pool.
C) premium discounts.
D) comprehensive coverage.
E) collision coverage.

Question 27

The ____________ method to settle claims is based on the current replacement cost of a damaged or lost item less depreciation.

A) replacement value
B) actual cash value
C) umbrella
D) endorsement
E) personal articles endorsement

Question 28

Which of the following home insurance policies will have the highest premium? $\begin{array}{c}\begin{array}{lll}\text{Policy Form}\\\text{Standard}\\\text{Broad}\\\text{Comprehensive}\\\end{array}\begin{array}{lll}\text{Building}\\\text{Named perils}\\\text{All risk}\\\text{All risk}\\\end{array}\begin{array}{lll}\text{Contents}\\\text{Named perils}\\\text{Named perils}\\\text{All risk}\\\end{array}\end{array}$

A) Standard
B) Broad
C) Comprehensive
D) All forms will have the same cost.
E) Broad and Comprehensive are equally expensive

Question 29

The purpose of a high-risk pool is to

A) provide insurance for poor drivers.
B) reduce medical costs associated with auto accidents.
C) take unsafe drivers off the road.
D) reduce auto insurance premiums with state regulation.
E) offer premium discounts to safe drivers.

Question 30

Which of the following is likely to increase your car insurance premium?
I. You live in a rural area.
II. You are over 70.
III. You usually carry several passengers.

A) I and II, only
B) II and III, only
C) I and III, only
D) I, II and III
E) I only

Question 31

Which of the following refers to a category based on age, sex, marital status, and driving habits that is used to set automobile insurance premiums?

A) rating territory
B) assigned risk pool
C) no-fault system
D) driver classification
E) use of the vehicle

Question 32

Your geographic location is a major factor in determining the ____________ used to calculate your automobile insurance premiums.

A) driver classification
B) assigned risk pool
C) coverage level
D) legal responsibilities
E) rating territory

Question 33

In the insurance industry, the term "peril" represents ________________.

A) the chance that something may be lost
B) the cause of the possible loss
C) a habit that increases the likelihood of loss
D) the actual loss experienced
E) your record of past losses

Question 34

Home insurance costs are affected most directly by

A) the number of claims in an area.
B) insurance agents' commission.
C) government regulations that set premiums.
D) processing costs of claims.
E) the profits of the insurance company.

Question 35

Which of the following is a system in which drivers involved in an accident collect medical expenses, lost wages, and related injury costs from their own insurance company?

A) assigned risk pool
B) no-fault insurance
C) comprehensive system
D) financial responsibility coverage
E) uninsured motorist's protection

Question 36

Identify the areas covered by tenants' insurance.
I. Personal property protection.
II. Additional living expenses.
III. Personal liability.
IV. Replacement value of premises.

A) I, II and III only
B) I and III only
C) II, III and IV only
D) I, II, III and IV
E) I, II, and IV

Question 37

____________ provides coverage for the risk of financial loss due to legal expenses, medical expenses, lost wages, and other expenses associated with injuries caused by an automobile accident for which you were responsible.

A) Medical payments
B) No-fault insurance
C) Uninsured motorist's protection
D) Bodily injury liability
E) Comprehensive insurance

Question 38

The purpose of minimum insurance legislation is to

A) risk of injury or death.
B) possibility of damage, destruction or theft.
C) third party liability.
D) A and B are correct.
E) A, B and C are correct.

Question 39

Ahmed Hadad was injured in an accident caused by another driver who did not have insurance. Ahmed's medical expenses would be covered by

A) medical payments.
B) collision.
C) bodily injury liability.
D) uninsured motorist's protection.
E) no-fault coverage.

Question 40

The requirement for a minimum level of home insurance coverage refers to which of the following?

A) Deductible
B) Specified perils
C) Endorsement
D) Co-insurance
E) Basic

Question 41

Anne has an expensive diamond ring. Which coverage from the following list would pay for damage or theft of this item?

A) an umbrella policy
B) a household inventory
C) additional living expense coverage
D) a personal articles endorsement
E) a coinsurance floater

Question 42

Which of the following would be covered by a home insurance policy?

A) earthquake damage
B) flooding
C) brush fires
D) fire damage to your garage
E) theft of business supplies from your office

Question 43

The purpose of insurance is to help protect you and your family against financial hardship due to hazard, accident, death, and the like.

Question 44

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

A) your automobile
B) a fence
C) a house
D) furniture
E) trees and shrubs

Question 45

Personal risks, property risks, and liability risks are types of speculative risks.

Question 46

Wind damage occurs to your car costing $3,000 to repair. If you have a $500 deductible for collision and full coverage for comprehensive, what portion of the claim will the insurance company pay?

A) $500
B) $1,300
C) $2,500
D) $3,000
E) $3,500

Question 47

Property risks

A) are the chance that something may be lost.
B) are the cause of a possible loss.
C) are legally defined as uninsurable.
D) are the uncertainties of direct or indirect losses to property due to fire, windstorms, accidents, theft, and other hazards.
E) are loss possibilities due to negligence resulting in bodily harm or property damage to others.

Question 48

Peril

A) is the chance that something may be lost.
B) is the cause of a possible loss.
C) increases the likelihood of loss through some peril.
D) is the uncertainty of direct or indirect losses to property due to fire, windstorms, accidents, theft, and other hazards.
E) is loss possibilities due to negligence resulting in bodily harm or property damage to others.

Question 49

Liability risk

A) carries a chance of either loss or gain, such as gambling or investing in a new business.
B) is the cause of a possible loss.
C) increases the likelihood of loss through some peril.
D) are the uncertainties of direct or indirect losses to property due to fire, windstorms, accidents, theft, and other hazards.
E) is loss possibilities due to negligence resulting in bodily harm or property damage to others.

Question 50

Risk management is not an organized strategy for protecting and conserving assets and people.

Question 51

Risk is

A) the chance that something may be lost.
B) is the cause of a possible loss.
C) the increased likelihood of loss through some peril.
D) uncertainties of direct or indirect losses to property due to fire, windstorms, accidents, theft, and other hazards.
E) loss possibilities due to negligence resulting in bodily harm or property damage to others.

Question 52

________ is an automobile insurance program in which drivers involved in accidents collect medical expenses, lost wages, and related injury costs from their own insurance companies.

A) Medical payments
B) No-fault insurance
C) Uninsured motorist's protection
D) Bodily injury liability
E) Comprehensive insurance

Question 53

If you have a $500 claim resulting from a fire in your home and your policy stipulates that your deductible is $500, then the insurance company will pay you

A) $0
B) $100
C) $150
D) $250
E) $500

Question 54

Your home insurance provides for replacement value for personal property losses. A television is stolen. It cost $1,000 two years ago and has an expected life of 5 years. A comparable television costs $500 today. What amount will the insurance company pay?

A) $100
B) $150
C) $200
D) $350
E) $500

Question 55

Hazard

A) is the chance that something may be lost.
B) is the cause of a possible loss.
C) increases the likelihood of loss through some peril.
D) is loss possibilities due to negligence resulting in bodily harm or property damage to others.
E) is a risk that carries a chance of either loss or gain.

Question 56

Which of the following refers to a category based on your place of residence that is used to set automobile insurance premiums?

A) rating territory
B) assigned risk pool
C) no-fault system
D) driver classification
E) use of the vehicle

Question 57

Tenant's insurance would include coverage for all of the following except

A) additional living expense coverage.
B) personal liability.
C) automobile theft.
D) personal property.
E) protection against financial loss due to damage.

Question 58

A speculative risk

A) is the chance that something may be lost.
B) is the cause of a possible loss.
C) increases the likelihood of loss through some peril.
D) is the uncertainty of direct or indirect loss to property due to fire, windstorms, accidents, theft and other hazards.
E) is a risk that carries a chance of either loss or gain and are legally defined as uninsurable.

Question 59

If you have a $2,000 claim resulting from a fire in your home and your policy stipulates that your deductible is $500, then the insurance company will pay you

A) $2,000
B) $1,500
C) $1,000
D) $500
E) $2,500

Question 60

Under the ____________ method for settling claims you receive the full cost of repairing or replacing a damaged or lost item and depreciation is not considered.

A) replacement value
B) actual cash value
C) umbrella
D) endorsement
E) personal articles endorsement

Question 61

Personal belongings of a high value can be protected with a personal articles endorsement.

Question 62

Replacement cost for settling property insurance claims is more costly than the actual cash value method.

Question 63

The most common method of dealing with risk is to shift, or transfer it to an insurance company or some other organization.

Question 64

Starting a small business that may or may not succeed is an example of speculative risk.

Question 65

Vicarious liability refers to the failure to take ordinary or reasonable care in a situation.

Question 66

Increased liability insurance is available with an umbrella policy.

Question 67

Collision coverage pays for damage to your vehicle for such hazards as fire, theft, or wind damage.

Question 68

A rider is an addition of coverage to a standard insurance policy.

Question 69

The higher the deductible you choose for your car insurance, the higher the premium.

Question 70

A speculative risk is a risk that carries a chance of either loss or gain.

Question 71

The homeowners' pets are included in the coverage provided by the homeowners insurance.

Question 72

The driver classification category is based on automobile style, model, and value of the vehicle.

Question 73

Accident benefits automobile insurance coverage pays for the costs of injuries to persons in the driver's vehicle.

Question 74

A home made of wood is more expensive to insure than a comparable brick structure.

Question 75

Voluntary medical payments coverage in a home insurance policy is designed to pay for legal action taken against a homeowner who may be legally responsible for injury or property damage of others.

Question 76

The purpose of a high-risk pool is to assist people with poor driving records in obtaining automobile insurance coverage.

Question 77

Personal property refers to building and other structures covered by homeowner's insurance.

Question 78

Property losses can be categorized into destruction of property, and losses due to robbery, burglary, vandalism, or arson.

Question 79

No-fault insurance systems have consistently reduced the time and costs involved in settling claims.

Question 80

There are no significant differences in home owner rates when comparing different insurance companies