Question 1

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.

Accepted Answer

This is an example of vicarious liability, where an employer is held responsible for the actions or omissions of their employees while they are carrying out their duties.

Question 2

Eating a balanced diet and exercising is an example of risk ________.

Accepted Answer

Eating a balanced diet and exercising are actions taken to reduce the likelihood of health issues, thus they are examples of risk reduction.

Question 3

Which form of a homeowner's policy expands coverage to include replacement cost on contents?

Accepted Answer

The Comprehensive Form (HO-5) policy offers the most extensive coverage for homeowners, including replacement cost coverage for both the dwelling and the contents without requiring the actual cash value settlement. This makes it the most inclusive option for homeowners seeking broad protection for their property and belongings.

Question 4

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

Accepted Answer

The additional living expenses component of a homeowner's insurance policy is specifically designed to cover the costs of temporary housing and other living expenses (like meals) if the insured's home is uninhabitable due to a covered loss, such as damage from a fire or a natural disaster.

Question 5

Negligence refers to:

Accepted Answer

Negligence is defined as the failure to take ordinary or reasonable care to prevent accidents or injuries.

Question 6

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

Accepted Answer

A personal property floater is a type of insurance coverage designed to cover valuable personal property that may not be adequately covered under standard homeowners or renters insurance policies, including expensive photography equipment.

Question 7

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

Accepted Answer

The answer of The ________ coverage of a home insurance...

Question 8

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

Accepted Answer

Liability is the legal responsibility for the financial cost of another person's losses or injuries. This term is commonly used in legal and insurance contexts.

Question 9

Wearing a seat belt in an automobile to protect yourself against the risk of injury in an automobile accident is an example of risk ________.

Accepted Answer

Wearing a seat belt is an example of risk reduction because it minimizes the severity of injuries in the event of an accident, rather than eliminating the risk of an accident occurring.

Question 10

Which one of the following is not covered by renter's insurance?

Accepted Answer

Renter's insurance typically covers the renter's personal property, additional living expenses if the rental is uninhabitable, and personal liability. It does not cover the building structure itself, such as damage to the building's roof; that would be the property owner's responsibility.

Question 11

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 $400 today.What amount will the insurance company pay?

Accepted Answer

Since the policy provides for replacement value, the insurance company will pay the cost of a comparable microwave today, which is $400.

Question 12

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

Accepted Answer

Home insurance policies typically cover damage to the structure of the home from perils like hail, which would include damage to your roof from hail. Hospital expenses, injury to animals, boats and aircraft, and theft of business supplies are generally not covered under standard home insurance policies.

Question 13

Kelly and Bob Walton recently purchased a new home and desire coverage for all causes of loss or damage except those specially excluded by the policy.They should obtain the ________ form for a homeowner's policy.

Accepted Answer

The special form for a homeowner's policy provides coverage for all causes of loss or damage except those specifically excluded by the policy, which matches Kelly and Bob Walton's needs.

Question 14

Renter's insurance would include coverage for:

Accepted Answer

Renter's insurance typically includes coverage for personal property, protecting the renter's belongings against risks like theft, fire, and vandalism. It does not cover the physical structure of the building, which is the landlord's responsibility, nor does it typically cover flood or earthquake damage without additional specific policies. Umbrella liability is a separate form of insurance that provides additional liability coverage beyond what is included in standard renters or homeowners policies.

Question 15

An umbrella policy is designed to cover:

Accepted Answer

An umbrella policy is specifically designed to provide additional coverage beyond the limits of standard insurance policies, primarily for major personal liability claims. This can include significant legal fees and damages that exceed the coverage of home or auto insurance policies.

Question 16

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

Accepted Answer

Negligence is the failure to take reasonable care to avoid harm to others. In this case, the homeowner failed to take reasonable care by leaving toys on the stairs, which resulted in injury to the delivery person.

Question 17

Most home insurance policies provide coverage for minor accidental injuries on your property under:

Accepted Answer

Medical payments coverage in home insurance policies typically covers minor accidental injuries that occur on your property, regardless of fault.

Question 18

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

Accepted Answer

High winds causing damage to trees, shrubs, and plants would be covered under the "house and other structures" component of homeowner's insurance, as this part of the policy typically covers damage to the main dwelling and other structures on the property from perils like windstorms.

Question 19

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

Accepted Answer

Furniture is considered personal property for home insurance coverage because it is movable and not permanently attached to the structure of the home.

Question 20

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

Accepted Answer

Speculative risk involves a situation where there is a possibility of either a gain or a loss. Starting a small business fits this description because the business could either succeed (gain) or fail (loss).

Quiz 10: Property and Motor Vehicle Insurance

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.