Question 1

________is the auto insurance coverage that would yield the most significant savings if eliminated.

Accepted Answer

Collision coverage tends to be one of the more expensive parts of an auto insurance policy because it covers the cost of damages to the policyholder's car in the event of an accident with another vehicle or object, regardless of who is at fault.

Question 2

Melvin has an auto insurance policy that includes both collision and comprehensive coverage.He has a $250 deductible on his collision coverage and a $100 deductible on his comprehensive coverage.His car has a book value of $7,500 when he is in a one-car accident with a tree.The car suffers damages of $5,000.How much will Melvin's insurance company pay for this repair work?

Accepted Answer

Since Melvin hit a tree, it's considered a collision. The insurance will cover the repair costs minus the deductible for collision coverage. Therefore, the insurance will pay $5,000 (damage) - $250 (deductible) = $4,750.

Question 3

Recommended limits for auto liability insurance are at least

Accepted Answer

The answer of Recommended limits for auto liability insurance are...

Question 4

An umbrella liability policy provides

Accepted Answer

An umbrella liability policy provides additional liability protection over and above any other liability insurance you carry, such as auto insurance, homeowner's insurance, or other liability policies. It acts as a safety net in case your other policies' limits are exceeded in a claim or lawsuit.

Question 5

Comprehensive automobile insurance protects against property damage losses caused by perils.Which one of the following is not a covered peril?

Accepted Answer

Rollover is not a covered peril under comprehensive automobile insurance. However, it may be covered under collision insurance if the policyholder has chosen to include it in their policy. Fire, theft, and hail are all common perils that are covered by comprehensive automobile insurance.

Question 6

Frank tried to enter the Central Expressway and caused a wreck.He had automobile insurance with limits of 30/50/15.What is the maximum this insurance policy would pay for the total of bodily injury liability claims in the accident?
$30,000

Accepted Answer

The policy limits of 30/50/15 mean that the insurance company will pay a maximum of $30,000 per injured person, up to a total of $50,000 for all injured persons, and a maximum of $15,000 for property damage. Therefore, the maximum this insurance policy would pay for the total of bodily injury liability claims in the accident is $50,000.

Question 7

Lina has 20/40/15 automobile liability coverage and is involved in an accident that is her fault.Damages suffered by the other parties in the accident are as follows:
​
 ​
How much of these claims will not be covered by the insurance company and therefore come out of Lina's budget?

Accepted Answer

The answer of Lina has 20/40/15 automobile liability coverage and...

Question 8

If your windshield is broken by a rock as you drive down the road,the damages would be covered by your ____ coverage.

Accepted Answer

The comprehensive coverage is designed to cover damages to your vehicle caused by events beyond your control, such as theft, fire, natural disasters, and breakage of glass or windshield due to a rock or other debris hitting it while driving. Collision coverage, on the other hand, would cover damages to your vehicle resulting from a collision with another car or object. Uninsured motorist and property damage liability coverages are intended to protect other parties in case you cause an accident, not to repair damages to your car.

Question 9

Mac and his girlfriend,Jessica,were involved in an accident with another car,which was not Mac's fault.They both sustained minor injuries,and Mac's car needed $2,000 in repairs.Mac had automobile property and liability insurance coverage,and his company paid the covered claims promptly.Which of the following statements regarding this situation is false?

Accepted Answer

The answer of Mac and his girlfriend,Jessica,were involved in an...

Question 10

Which of the following coverages are relatively inexpensive to carry?

Accepted Answer

Rental reimbursement and towing coverage are relatively inexpensive compared to other types of auto insurance coverages like collision, comprehensive, or liability coverage. These coverages provide specific, limited benefits that cost less to the insurer to provide.

Question 11

Justin has auto insurance coverage of 25/75/15 for his new Nissan.Being a nice guy,Justin lets his friend use the car.The friend was involved in a major accident and was at fault.Following are the damages:
 ​
How much will Justin's auto insurance pay for the above damages?

Accepted Answer

The answer of Justin has auto insurance coverage of 25/75/15...

Question 12

After purchasing a new computer,Sally met her friend Jason for lunch.On returning to her car,Sally discovered that her car had been broken into and her computer was gone.____ insurance will cover the damage to her car,and ____ insurance will cover the stolen computer.

Accepted Answer

Comprehensive auto insurance covers damages to the insured's car from theft, vandalism, natural disasters, and other unexpected events. Homeowner's insurance covers losses for personal property, such as a stolen computer, even if it was not stolen from the insured's home. Collision insurance covers damages to the insured's car resulting from a collision with another car or object. Therefore, the best option is to rely on comprehensive auto insurance to cover the damage to the car and homeowner's insurance to cover the stolen computer.

Question 13

____ are specifically designed for situations where more than one person is likely to be driving the car being insured

Accepted Answer

Family automobile policies are designed for situations where more than one person is likely to be driving the car being insured. This type of policy provides coverage for multiple drivers within the same household, making it a convenient and cost-effective option for families with multiple drivers.

Question 14

A situation involving certain types of perils such as earthquakes and floods where only those people with high probabilities of loss will want to buy the coverage thereby violating the law of large numbers is called

Accepted Answer

This situation is known as adverse selection, where only the individuals at a higher risk of suffering a loss are likely to purchase the insurance coverage. This violates the law of large numbers, which states that insurance works because losses are distributed over a large pool of insured individuals. When only a small group of people with high probabilities of loss buy the insurance, the insurer's ability to spread the risk and predict future losses is compromised.

Question 15

Misty and her passenger,Angela,were involved in a one-car accident for which Misty was not at fault.Misty suffered bodily injuries of $5,500,while Angela's bodily injuries were $35,000.If Misty's auto insurance policy includes 20/40/15 bodily injury liability and $10,000 medical payments insurance,how much will the insurance policy pay for Misty and Angela's injuries?

Accepted Answer

Misty's medical payments insurance covers her injuries up to $10,000, so it will pay $5,500 for her. Angela's injuries are covered under the bodily injury liability, which pays up to $20,000 per person, so it will pay $10,000 for Angela.

Question 16

Bruce's 2003 Chevrolet Malibu is pretty old now,and its resale value is low.Since he is always interested in saving insurance premium dollars when appropriate,which of the following types of insurance should he consider dropping?

Accepted Answer

Collision coverage pays for damage to Bruce's car in the event of an accident, but since the car is old and has a low resale value, it may not be worth paying for this coverage anymore. Bruce could consider dropping collision coverage to save on his insurance premiums, especially if he has enough savings to cover the cost of repairing or replacing the car if it is damaged in an accident. However, he should still keep property damage liability and uninsured motorist coverage to protect himself financially in case he causes damage to someone else's property or is involved in an accident with an uninsured or underinsured driver.

Question 17

Natalie has an auto insurance policy that includes both collision and comprehensive coverage.She has a $500 deductible on her collision coverage and a $200 deductible on her comprehensive coverage.Her car has a book value of $7,000 when her car is damaged by a tornado.The car will cost $8,500 to repair.How much will Natalie's insurance company pay in this situation?

Accepted Answer

Since Natalie has both collision and comprehensive coverage, we need to determine which coverage will apply in this scenario.

Since the car was damaged by a tornado, this would be covered under Natalie's comprehensive coverage, which has a $200 deductible. Therefore, Natalie would need to pay $200 out of pocket.

Now, we need to determine how much Natalie's insurance company will pay. The car has a book value of $7,000 and will cost $8,500 to repair. Since the cost to repair the car is greater than its book value, the insurance company will consider the car a total loss.

The insurance company will pay out the actual cash value of the car, which is $7,000 minus the $500 collision deductible (since collision coverage would apply if the car was repairable). Therefore, the insurance company will pay out $6,500 ($7,000 - $500) to Natalie.

Adding in Natalie's $200 deductible, the total amount she will receive from her insurance company is $6,700 ($6,500 + $200), which is closest to option B, $6,800.

Question 18

Your collision coverage generally protects you when you drive

Accepted Answer

Collision coverage typically extends to your own car, rental cars, and even when you're driving a friend's car, assuming you're driving with their permission and don't regularly use the vehicle.

Question 19

Stanley was involved in an auto accident that was ruled his fault.He carried only liability coverage on his car,and its limits were only 20/40/15.The following damages were incurred in the accident: 
​
 ​
How much of these damages will Stanley's auto insurance policy pay?

Accepted Answer

The answer of Stanley was involved in an auto accident...

Question 20

Minor injuries to passengers in your car would be covered by which of the following parts of your auto insurance policy?

Accepted Answer

Medical payments coverage is designed to cover medical expenses for the driver and passengers of the insured vehicle in the event of an accident, regardless of who is at fault.

Quiz 10: Managing Property and Liability Risk

________is the auto insurance coverage that would yield the most significant savings if eliminated.

Recommended limits for auto liability insurance are at least

An umbrella liability policy provides

Comprehensive automobile insurance protects against property damage losses caused by perils.Which one of the following is not a covered peril?

Frank tried to enter the Central Expressway and caused a wreck.He had automobile insurance with limits of 30/50/15.What is the maximum this insurance policy would pay for the total of bodily injury liability claims in the accident? $30,000

Lina has 20/40/15 automobile liability coverage and is involved in an accident that is her fault.Damages suffered by the other parties in the accident are as follows: How much of these claims will not be covered by the insurance company and therefore come out of Lina's budget?

If your windshield is broken by a rock as you drive down the road,the damages would be covered by your ____ coverage.

Which of the following coverages are relatively inexpensive to carry?

Justin has auto insurance coverage of 25/75/15 for his new Nissan.Being a nice guy,Justin lets his friend use the car.The friend was involved in a major accident and was at fault.Following are the damages: How much will Justin's auto insurance pay for the above damages?

After purchasing a new computer,Sally met her friend Jason for lunch.On returning to her car,Sally discovered that her car had been broken into and her computer was gone. insurance will cover the damage to her car,and insurance will cover the stolen computer.

____ are specifically designed for situations where more than one person is likely to be driving the car being insured

A situation involving certain types of perils such as earthquakes and floods where only those people with high probabilities of loss will want to buy the coverage thereby violating the law of large numbers is called

Bruce's 2003 Chevrolet Malibu is pretty old now,and its resale value is low.Since he is always interested in saving insurance premium dollars when appropriate,which of the following types of insurance should he consider dropping?

Your collision coverage generally protects you when you drive

Stanley was involved in an auto accident that was ruled his fault.He carried only liability coverage on his car,and its limits were only 20/40/15.The following damages were incurred in the accident: How much of these damages will Stanley's auto insurance policy pay?

Minor injuries to passengers in your car would be covered by which of the following parts of your auto insurance policy?

Quiz 10: Managing Property and Liability Risk

________is the auto insurance coverage that would yield the most significant savings if eliminated.

Recommended limits for auto liability insurance are at least

An umbrella liability policy provides

Comprehensive automobile insurance protects against property damage losses caused by perils.Which one of the following is not a covered peril?

Frank tried to enter the Central Expressway and caused a wreck.He had automobile insurance with limits of 30/50/15.What is the maximum this insurance policy would pay for the total of bodily injury liability claims in the accident? $30,000

Lina has 20/40/15 automobile liability coverage and is involved in an accident that is her fault.Damages suffered by the other parties in the accident are as follows: ​ ​ How much of these claims will not be covered by the insurance company and therefore come out of Lina's budget?

If your windshield is broken by a rock as you drive down the road,the damages would be covered by your ____ coverage.

Which of the following coverages are relatively inexpensive to carry?

Justin has auto insurance coverage of 25/75/15 for his new Nissan.Being a nice guy,Justin lets his friend use the car.The friend was involved in a major accident and was at fault.Following are the damages: ​ How much will Justin's auto insurance pay for the above damages?

After purchasing a new computer,Sally met her friend Jason for lunch.On returning to her car,Sally discovered that her car had been broken into and her computer was gone.____ insurance will cover the damage to her car,and ____ insurance will cover the stolen computer.

____ are specifically designed for situations where more than one person is likely to be driving the car being insured

A situation involving certain types of perils such as earthquakes and floods where only those people with high probabilities of loss will want to buy the coverage thereby violating the law of large numbers is called

Bruce's 2003 Chevrolet Malibu is pretty old now,and its resale value is low.Since he is always interested in saving insurance premium dollars when appropriate,which of the following types of insurance should he consider dropping?

Your collision coverage generally protects you when you drive

Stanley was involved in an auto accident that was ruled his fault.He carried only liability coverage on his car,and its limits were only 20/40/15.The following damages were incurred in the accident: ​ ​ How much of these damages will Stanley's auto insurance policy pay?

Minor injuries to passengers in your car would be covered by which of the following parts of your auto insurance policy?

Lina has 20/40/15 automobile liability coverage and is involved in an accident that is her fault.Damages suffered by the other parties in the accident are as follows: How much of these claims will not be covered by the insurance company and therefore come out of Lina's budget?

Justin has auto insurance coverage of 25/75/15 for his new Nissan.Being a nice guy,Justin lets his friend use the car.The friend was involved in a major accident and was at fault.Following are the damages: How much will Justin's auto insurance pay for the above damages?

After purchasing a new computer,Sally met her friend Jason for lunch.On returning to her car,Sally discovered that her car had been broken into and her computer was gone. insurance will cover the damage to her car,and insurance will cover the stolen computer.

Stanley was involved in an auto accident that was ruled his fault.He carried only liability coverage on his car,and its limits were only 20/40/15.The following damages were incurred in the accident: How much of these damages will Stanley's auto insurance policy pay?