Question 1

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-The Principle of [Indemnity | Peril] states that the insured may not be compensated by the insurance company in an amount exceeding the insured's economic loss.

Accepted Answer

The phrase "Principle of Indemnity" refers to the concept that the insurance company should only compensate the insured for their actual economic loss. The term "Peril" refers to a specific cause of loss, such as fire or theft, and is not related to this principle.

Question 2

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-You own your house.The amount of insurance coverage you will have on your furniture will be dependent upon [the replacement value of your house | the amount of insurance on your home].

Accepted Answer

The amount of insurance coverage for furniture is typically based on the amount of insurance on the home itself, rather than the replacement value of the house.

Question 3

The best place to buy automobile insurance is

Accepted Answer

An insurance agent is the best place to buy automobile insurance because they can provide multiple quotes from different insurance companies, offer personalized guidance and advice, and assist with filing claims if necessary. Auto dealers and finance companies may offer insurance options, but they often have limited coverage options and may not provide the same level of expertise as an insurance agent. The state insurance commission is a regulatory body and not a place to purchase insurance directly.

Question 4

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-A HO-2 policy will protect your property from losses due to [all | listed] perils.

Accepted Answer

An HO-2 policy is a named perils policy, which means it only covers losses that are specifically listed in the policy. Therefore, the correct choice is "listed perils."

Question 5

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-Your house has a replacement value of $120,000.Your HO policy has an 80% co-insurance clause.In order to receive full compensation if your house is totally destroyed,you must carry insurance for [$96,000 | $120,000].

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 6

INSTRUCTIONS: Choose the word or phrase in [ ] which 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].

Accepted Answer

Subrogation is the right of the insurance company to recover the amount they paid for damages from the at-fault party. Indemnification refers to the act of compensating someone for losses, but it is not applicable in this context.

Question 7

The advisable dollar limit for any one auto accident is

Accepted Answer

The answer of The advisable dollar limit for any one...

Question 8

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-[Negligence | Indemnity] is the failure to act in a reasonable manner or take necessary steps to protect others from harm.

Accepted Answer

The word "negligence" refers to the failure to take reasonable action or precautions, which fits the context of the statement. "Indemnity" refers to protection from financial loss or liability, which is not directly related to the concept of failing to protect others from harm.

Question 9

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-[Comprehensive | Named Peril] policy covers all perils unless they are specifically excluded.

Accepted Answer

A comprehensive policy covers all perils unless they are specifically excluded. A named peril policy only covers specifically named perils.

Question 10

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-A HO-3 policy will protect your property from losses due to [all | listed] perils.

Accepted Answer

A HO-3 policy will protect your property from losses due to all perils, except those specifically excluded in the policy.

Question 11

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-Most HO policies [would | would not] contain a clause requiring you to carry insurance equal to a minimum percent of the replacement value of your home in order to be paid in full for small losses.

Accepted Answer

The statement describes a clause that is typically included in HO policies, so the correct option is "would." Option B is incorrect because it contradicts the statement by saying that most HO policies would not contain the clause. Option C is incorrect because it does not provide a suitable alternative to the two options provided.

Question 12

Section I of a homeowner's insurance policy covers all of the following except

Accepted Answer

Section I of a homeowner's insurance policy typically covers the dwelling, other structures, and personal property. Personal liability is usually covered under Section II.

Question 13

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-Negligent acts must be [intentional | unintentional] in order to be insured.

Accepted Answer

Negligent acts must be unintentional in order to be insured. Insurances generally do not cover intentional acts, such as deliberate damage or harm caused by an individual.

Question 14

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-When considering your possible losses as a property owner,you would be more likely to suffer a very severe loss from [loss of property | liability claims].

Accepted Answer

Liability claims refer to legal responsibility for any injury, damage, or loss of life occurring on the property. While loss of property is a significant loss, liability claims have the potential to result in extremely high monetary damages and legal fees. Therefore, liability claims are more likely to result in severe losses for property owners.

Question 15

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-Earthquake policy and flood protection [would | would not] be provided by the standard HO policy.

Accepted Answer

The statement is saying that earthquake policy and flood protection are not covered by the standard HO policy. Therefore, the correct choice is "would not."

Question 16

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-You use a small building on your property to manufacture Widgets.This building [will | will not] be covered by your standard HO policy.

Accepted Answer

A standard Homeowners (HO) policy typically does not cover buildings used for business purposes, such as manufacturing Widgets.

Question 17

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-Actual cash value (ACV)is calculated by subtracting depreciation from the [purchase price | replacement cost] of an item.

Accepted Answer

Actual cash value (ACV) is calculated by subtracting depreciation from the replacement cost of an item, not the purchase price.

Question 18

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-[HO-2 | HO-3] is an example of a named peril policy.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 19

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-Marilee has insurance (which does not expire for another six months)on a house she recently sold to Claudia.Now the house has been flattened by a tornado.Marilee [can | cannot] collect on her policy.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 20

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-When selling you a HO policy,your insurance agent will [require | suggest] that you prepare a personal property inventory.

Accepted Answer

The most appropriate word to fill the blank is "suggest" which means to propose or recommend something. Insurance agents are usually not in a position to compel their clients to prepare a personal property inventory; however, they can recommend it to ensure that their clients get the maximum benefit from their home insurance policy. Therefore, the correct answer is Choice B.

Quiz 10: Protecting Your Property

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -The Principle of [Indemnity | Peril] states that the insured may not be compensated by the insurance company in an amount exceeding the insured's economic loss.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -You own your house.The amount of insurance coverage you will have on your furniture will be dependent upon [the replacement value of your house | the amount of insurance on your home].

The best place to buy automobile insurance is

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -A HO-2 policy will protect your property from losses due to [all | listed] perils.

The advisable dollar limit for any one auto accident is

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -[Negligence | Indemnity] is the failure to act in a reasonable manner or take necessary steps to protect others from harm.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -[Comprehensive | Named Peril] policy covers all perils unless they are specifically excluded.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -A HO-3 policy will protect your property from losses due to [all | listed] perils.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Most HO policies [would | would not] contain a clause requiring you to carry insurance equal to a minimum percent of the replacement value of your home in order to be paid in full for small losses.

Section I of a homeowner's insurance policy covers all of the following except

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Negligent acts must be [intentional | unintentional] in order to be insured.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -When considering your possible losses as a property owner,you would be more likely to suffer a very severe loss from [loss of property | liability claims].

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Earthquake policy and flood protection [would | would not] be provided by the standard HO policy.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -You use a small building on your property to manufacture Widgets.This building [will | will not] be covered by your standard HO policy.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Actual cash value (ACV) is calculated by subtracting depreciation from the [purchase price | replacement cost] of an item.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -[HO-2 | HO-3] is an example of a named peril policy.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Marilee has insurance (which does not expire for another six months) on a house she recently sold to Claudia.Now the house has been flattened by a tornado.Marilee [can | cannot] collect on her policy.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -When selling you a HO policy,your insurance agent will [require | suggest] that you prepare a personal property inventory.