Question 1

The "other-insurance clause" helps prevent the violation of the principle of indemnity.

Accepted Answer

The other-insurance clause in an insurance policy states how the policy will interact with other insurance policies that might also provide coverage for the same loss. By establishing which policy is primary and which is secondary, the other-insurance clause helps prevent over-insurance and the violation of the principle of indemnity, which holds that the insured should be fully compensated for their loss but should not profit from it. Thus, the statement is true.

Question 2

A trampoline in your back yard is an example of a hazard.

Accepted Answer

While trampolines can be a fun activity, they can also be hazardous if not used properly or without proper safety measures in place. Injuries such as sprains, fractures, and head injuries can occur from trampoline use.

Question 3

Liability claims may result from alleged negligent acts.

Accepted Answer

Liability claims can result from alleged negligent acts, meaning that a person or organization could be held responsible for damages or injuries due to their actions or lack of actions.

Question 4

The principle of indemnity generally limits the amount that the insured may collect to the actual cash value of the property.

Accepted Answer

The principle of indemnity is based on the concept that an insured should not profit from an insurance claim. Therefore, the amount that the insured may collect is generally limited to the actual cash value of the property at the time of the loss, and not the full replacement cost.

Question 5

Liability insurance generally provides some coverage for legal fees.

Accepted Answer

Liability insurance typically includes coverage for legal fees and expenses related to defending against claims or lawsuits covered by the policy. However, the specifics of the coverage and the amount of the coverage can vary depending on the policy and the insurer. It's important to review the terms and conditions of a liability insurance policy carefully to understand what is covered and what is excluded.

Question 6

Actual cash value is defined as replacement cost minus depreciation.

Accepted Answer

Actual cash value is calculated by subtracting depreciation from the replacement cost of an item.

Question 7

The most common definition of actual cash value is purchase price less depreciation.

Accepted Answer

The answer of The most common definition of actual cash...

Question 8

You would be considered to be negligent when you,a dependent,or another named insured's action causes harm or property loss.

Accepted Answer

Negligence is typically defined as a failure to use reasonable care, resulting in harm or property loss. If your actions, or those of a dependent or another named insured, cause such harm or loss, you could be considered negligent.

Question 9

Personal property floaters provide increased coverage for jewelry and other collectable items at an additional premium.

Accepted Answer

Personal property floaters are designed to provide additional coverage for valuable items such as jewelry and collectibles, and they typically require an additional premium to be paid.

Question 10

Actual cash value provides coverage at the current market value of your property.

Accepted Answer

Actual cash value provides coverage based on the replacement cost of the property minus depreciation, not the current market value.

Question 11

Earthquakes are covered under most homeowner's policies.

Accepted Answer

Earthquakes are typically not covered under standard homeowner's insurance policies. Special additional coverage or a separate earthquake insurance policy may be needed.

Question 12

A peril is a cause of loss.

Accepted Answer

A peril is an event or condition that could cause a loss, such as a fire or theft. Therefore, a peril is a cause of loss.

Question 13

The terms "perils" and "losses" refer to the same thing.

Accepted Answer

Perils and losses are not the same thing. Perils refer to the various risks or events that may cause damage or destruction to property or injury to a person, while losses refer to the actual damage or harm suffered as a result of those perils.

Question 14

Property inventories are important to identify insurance needs and to substantiate claims.

Accepted Answer

Property inventories provide a detailed list of items in a property, which can assist in determining appropriate insurance coverage and can also serve as evidence in the event of a claim.

Question 15

Antiques,collections,and boats are adequately protected under a standard homeowner's policy.

Accepted Answer

Antiques, collections, and boats typically require additional coverage or specific policies to be adequately protected, and are not covered under a standard homeowner's policy.

Question 16

The principle of indemnity does not apply to life and health insurance.

Accepted Answer

The principle of indemnity applies to property and casualty insurance where the insurer agrees to compensate the insured for the actual amount lost or damage incurred. However, life and health insurance focuses on the risk of financial loss due to illness, injury, or death, and the principle of indemnity is not applicable in these cases. Instead, insurers pay out a predetermined benefit or coverage amount.

Question 17

The right of subrogation allows the insurer to get reimbursed for claims paid.

Accepted Answer

The right of subrogation is a common provision in insurance contracts that allows the insurer to step into the shoes of the insured and claim against a third party who caused the loss or damage. If the insurer pays a claim to the insured, it has the right to recover the amount paid from any responsible third party, up to the limit of the policy. This helps prevent the insured from receiving a windfall, and also helps keep premiums low by preventing duplicate payments for the same loss. Therefore, the statement "the right of subrogation allows the insurer to get reimbursed for claims paid" is true.

Question 18

If your insurance company makes a payment to you,subrogation is the right of the company to collect from the person causing the accident or from his/her insurance company.

Accepted Answer

This is a correct statement. Subrogation is the legal right of an insurance company to recover the amount paid to its insured from a third party who caused the loss or from their insurance company.

Question 19

The principle of indemnity states that the insured can be compensated for an amount equal to his economic loss.

Accepted Answer

The principle of indemnity ensures that the insured is compensated for the actual loss suffered due to an insured event, up to the limit of the coverage provided by the insurance policy. This means that the insured cannot recover more than the economic loss incurred, as such a situation would result in overcompensation or unjust enrichment.

Question 20

Property insurance is meant to protect property owners from two basic types of exposures,physical loss of property and loss through depreciation.

Accepted Answer

Property insurance typically covers physical loss or damage to property, but not loss through depreciation, which is a decrease in value over time due to wear and tear or obsolescence.

Quiz 10: Protecting Your Property