Question 1

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

Accepted Answer

The rating territory, or geographical location, is a major factor in determining automobile insurance premiums. Insurance companies use the location to assess the risk of theft, vandalism, accidents, and natural disasters in that area, which can affect the cost of insurance policies. For example, drivers in high-crime areas or areas prone to severe weather may have higher premiums to account for the increased risk.

Question 2

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

Accepted Answer

Age is a critical factor in determining driver classification, as it's a fairly reliable indicator of driving experience and risk. Younger drivers tend to be less experienced and more prone to accidents, while older drivers may have slower reflexes and decreased mobility that could interfere with driving ability.

Question 3

Kevin Brown rides his bicycle to work so that he doesn't have to worry about getting in a car accident.How is Kevin managing his risk?

Accepted Answer

Kevin Brown is avoiding the risk of getting in a car accident by riding his bicycle to work.

Question 4

Tara Guest owns a home in Edmond,Oklahoma.She is worried about a tornado causing damage to her home.The tornado is an example of a:

Accepted Answer

A peril is an event or condition that can cause damage or loss, such as a tornado. Hazards are conditions or situations that increase the likelihood of a peril occurring, while risks refer to the probability of a loss occurring. Premium refers to the amount paid for insurance coverage, and liability refers to legal responsibility for damages or injuries.

Question 5

Brett Johnson owns a home in Yukon,Oklahoma.A babysitter he hires breaks her leg when she trips over the dog.What part of his homeowner's insurance would cover this loss?

Accepted Answer

Personal liability coverage provides protection for an insured person against liability arising out of the injury to other people or damage to their property. In this case, the babysitter's injury would be covered by the personal liability coverage of Brett Johnson's homeowner's insurance policy.

Question 6

Zachary Harris owns a home in Elk City.There was a bad thunderstorm and his gazebo was hit by lightening and burned to the ground.What part of his homeowner's insurance policy would cover this loss?

Accepted Answer

The loss of the gazebo would fall under the category of "buildings and other structures" covered by Zachary's homeowner's insurance policy.

Question 7

Larry Foster has bought a car with front and side airbags and antilock brakes.How is Larry managing his risk?

Accepted Answer

Larry is managing his risk by reducing it through purchasing a car with safety features such as front and side airbags and antilock brakes. This reduces the potential harm or damage that could occur in the event of an accident.

Question 8

Nick Rodr owns a home in Edmond,Oklahoma and pays $665 per year in insurance on the home.The $665 is an example of a:

Accepted Answer

The $665 is an example of a premium, which is the amount of money paid by an individual for insurance coverage.

Question 9

Craig Brown owns a home in San Francisco,California.There is a major earthquake and his house is damaged by the earthquake.What type of insurance would he have to have to cover this loss?

Accepted Answer

Specialized coverage, specifically earthquake insurance, is needed to cover damages caused by earthquakes, as standard homeowners insurance policies typically do not cover earthquake damage.

Question 10

Peter Jacobs has set aside $5,000 in case he has an accident in his 1980 Honda Civic.He does not have collision insurance on this car.How is Peter managing his risk?

Accepted Answer

Peter is assuming the risk by setting aside $5,000 in case of an accident rather than transferring the risk to an insurance company through purchasing collision insurance.

Question 11

David Bowers must show a card from his automobile insurance company when he registers his car in the state of Oklahoma each year.Which of the following types of laws is the reason he must show this card each year?

Accepted Answer

Financial responsibility laws require drivers to have proof of insurance, and in Oklahoma, drivers must show their insurance card when registering their car each year. Lemon laws deal with defective vehicles, Truth in Lending laws deal with consumer borrowing, Equal Opportunity laws deal with discrimination, and fiscal responsibility laws are a more general category that may refer to government budgeting or personal financial management.

Question 12

Joan Stone owns a home in Edmond,Oklahoma.She is worried her property might be damaged due to some unforeseen event.This worry about a loss is an example of a:

Accepted Answer

A peril is an actual event that causes damage, such as a fire or a storm. A hazard is a condition that increases the likelihood of a peril occurring, such as leaving a stove on or having a dead tree next to the house. A risk is the possibility of loss or damage occurring due to a peril or hazard. In this case, Joan's worry about potential damage is a manifestation of her perception of risk, making C the correct answer. Premium refers to the amount paid for an insurance policy, while policy refers to the actual insurance contract. These terms do not apply to Joan's situation.

Question 13

Robert Plant pays a premium each month to State Farm Insurance for automobile insurance on his 2003 Dodge Ram pick-up truck.How is Robert managing his risk?

Accepted Answer

Robert is managing his risk by shifting it to the insurance company, State Farm, by paying a premium for coverage.

Question 14

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

Accepted Answer

Driver classification is a system used by insurance companies that categorizes their clients based on age, sex, marital status, and driving habits. This classification is then used to determine the risk level and subsequently set the premiums for auto insurance policies.

Question 15

Wind damage occurs to your car costing $800 to repair.If you have a $100 deductible for collision and full coverage for comprehensive,what portion of the claim will the insurance company pay?

Accepted Answer

The answer of Wind damage occurs to your car costing...

Question 16

A system that requires each insurance company operating in a state to provide coverage to individuals who have been unable to obtain other insurance is referred to as:

Accepted Answer

An assigned risk pool is a system where insurance companies are required to provide coverage to individuals who have been unable to obtain other insurance. This is also known as the "shared market" or the "residual market." The purpose of this system is to ensure that everyone has access to some level of insurance coverage, regardless of their risk level or ability to pay.

Question 17

William Bennett owns a home in Oviedo,Florida.There was a fire in his home and he and his family had to move to a motel until his home could be fixed.What part of his homeowner's insurance policy would cover the cost of the motel?

Accepted Answer

Additional living expenses coverage is designed to provide reimbursement for the expenses incurred as a result of being forced to temporarily live away from home while repairs are made.

Question 18

Susan Bize owns a home in Edmond,Oklahoma.She has a coffee maker in the home that has been recalled because it is likely to start fires.The coffee maker is an example of a:

Accepted Answer

A hazard is any situation or object that can cause harm, damage or adverse health effects. The coffee maker in Susan Bize's home is a hazard because it has been recalled for the potential risk of starting fires. Peril refers to the cause of loss, risk refers to the likelihood of the loss occurring, premium is the cost of insurance coverage, and deductible is the amount the policyholder must pay before insurance coverage kicks in. None of these options fully apply to the situation with Susan Bize's coffee maker.

Question 19

Albert Finney owns a home in Pompano Beach,Florida.His house is broken into and the burglar steals his computer,his big screen TV,his stereo equipment,and his toaster.What part of his homeowner's insurance would cover this loss?

Accepted Answer

Personal property coverage typically covers the loss or damage of personal belongings within the insured's home or on their property, including stolen items such as a computer, TV, stereo equipment, and toaster. Buildings and other structures coverage is meant to cover the actual physical structure of the home, additional living expenses coverage protects against living expenses incurred due to a covered loss, personal liability covers liability and legal fees, and specialized coverage may include things like flood insurance or jewelry insurance.

Question 20

The purpose of an assigned risk pool is to:

Accepted Answer

The answer of The purpose of an assigned risk pool...

Quiz 10: Property and Motor Vehicle Insurance