Deck 10: Protecting Your Property

Question 1

Which of the following homeowner's policies provides coverage for the damage caused by the accidental discharge of water or steam?

A)HO-7
B)HO-2
C)HO-8
D)HO-9
E)HO-1

Answer 1

B

Question 2

A personal property floater and a personal liability umbrella policy offer similar coverage.

Answer 2

False

Question 3

A captive agent typically represents two to ten different insurance companies.

Answer 3

False

Question 4

A house with a replacement value of $110,000 is currently insured for $90,000. The house is damaged in a windstorm, causing a loss of $15,000. The insurance company will pay an amount equal to $15,000 less the deductible.

Question 5

Which of the following homeowner's policies is best suited to a renter of an apartment?

A)HO-1
B)HO-2
C)HO-3
D)HO-4
E)HO-8

Question 6

Negligence occurs when someone:

A)is not insured.
B)fails to act as an insured.
C)fails to act in a reasonable manner.
D)admits an error.
E)is more than 18 years of age.

Question 7

The federal government has introduced a subsidized flood insurance program for homeowners and tenants living in designated communities.

Question 8

Uninsured motorists protection usually provides protection to the insured's car if a hit-and-run incident occurs.

Question 9

The principle of indemnity will prevent:

A)the act of one person from being assigned to another.
B)an insured from collecting more than what he or she has lost.
C)a negligent third party from being held liable for damages if the injured party is insured.
D)a significant amount of loss control activity.
E)an insurer from ever waiving its right to subrogation.

Question 10

Homeowner's co-insurance requires the insured to carry insurance protection equal to the market value of the house.

Question 11

Which of the following homeowner's policies provides coverage for damage caused by electrical current?

A)HO-7
B)HO-2
C)HO-8
D)HO-9
E)HO-1

Question 12

Which of the following is a basic, seldom-used homeowner's policy with very narrow coverage?

A)HO-1
B)HO-2
C)HO-3
D)HO-4
E)HO-6

Question 13

A liability suit could result against you if:

A)lightning strikes your home.
B)your son falls down the stairs of your home.
C)your automobile is stolen.
D)your dog bites your neighbor.
E)smoke from the fireplace fills your house.

Question 14

Insurance policies provide the opportunity for claims arbitration to settle any disputed liability claims.

Question 15

The premiums for homeowner's insurance policies are affected by the type of structure and its location.

Question 16

The personal property floater:

A)provides either blanket or scheduled coverage of items that are not covered adequately in a standard homeowner's policy.
B)is available to meet the needs of "innocent" victims of accidents who are negligently injured by uninsured, underinsured, or hit-and-run motorists.
C)is a specialized inland marine policy covering boats and trailers used with boats.
D)covers against liability caused by the ownership or use of items of personal property.
E)is an additional amount of insurance equal to a specified percentage of the replacement value of the property.

Question 17

Suppose you carelessly, but unintentionally, knocked someone down a flight of stairs in your home. You would be covered by your homeowner's insurance.

Question 18

Increasing the amount of the deductible is the only way to bring down the cost of homeowner's insurance.

Question 19

Never discuss liability at the scene of an accident, or with anyone other than the police and your insurer.

Question 20

Floods are covered under most homeowner's insurance policies.

Question 21

A personal liability umbrella policy typically includes:

A)subsidies for flood insurance established in cooperation with a private insurance agent.
B)added liability coverage for homeowner's and automobile insurance.
C)coverage for only other types of vehicles such as mobile homes.
D)the basic health and homeowner's protection needed by most families.
E)the provision for assessment of liability by the police at the scene of the accident.

Question 22

Standard homeowner's policies will not include coverage for damage done by:

A)fire.
B)flood.
C)lightning.
D)wind.
E)glass breakage.

Question 23

A captive agent is a(n):

A)insurance agent who represents only one insurance company.
B)federal insurance agent who can sell low-cost flood insurance coverage.
C)independent agent who can insure homeowners and tenants together for flood insurance.
D)insurance agent who insures only homes and vehicles.
E)claims adjustor who assesses the probability of law violations during an investigation.

Question 24

An increase in the amount of the deductible will:

A)increase the insurance coverage.
B)decrease the replacement cost of the insured property.
C)decrease the amount of insurance premiums.
D)increase the personal property floater coverage for the insured property.
E)decrease the value of the property.

Question 25

Donna, who is single and 30 years old, received several speeding tickets recently and was shocked by the effect they had on her auto insurance. Donna drives a 2017 Pontiac Firebird. She is currently not covered by health insurance, has an emergency fund of $25,000, an income of $100,000 per year, and an investment portfolio of $230,000. She is trying to reduce the price of her auto insurance. Which of the following actions is most likely to help Donna reduce the price of her auto insurance?

A)Maintaining her liability limits at current levels
B)Raising her medical payments coverage
C)Raising her deductible from $250 to $1,000
D)Maintaining her collision coverage at current levels
E)Raising her collision coverage by $10,000

Question 26

Replacement-cost coverage is the reimbursement of:

A)the cost of repairing or replacing damaged structures without deducting depreciation.
B)reasonable living expenses while the insured's house is being repaired.
C)the cost of damages caused by perils other than those mentioned in the policy.
D)the cost of defending the insured.
E)the increase in the deductible to reduce the amount of the insurance premium.

Question 27

The best way to buy automobile insurance is through a(n):

A)insurance agent.
B)state insurance commission.
C)auto dealer.
D)finance company.
E)bank.

Question 28

Section II of a homeowner's insurance contract covers:

A)hospitalization costs for the insured.
B)damages caused by a covered peril.
C)living expenses while an insured's house is repaired.
D)paying successfully pursued liability claims against an insured.
E)damages caused by people renting the property.

Question 29

Section I of a homeowner's insurance policy covers:

A)the cost of defending the insured.
B)the reasonable expenses incurred by an insured in helping the insurance company's defense.
C)hospitalization costs provided to the insured.
D)the dwelling, accompanying structures, and personal property of the insured.
E)the liability for negligence of the insured.

Question 30

Auto insurance is needed primarily:

A)to finance automobile maintenance.
B)as protection against the cost of significant loss.
C)as a part of the homeowner's insurance requirements.
D)to counter the effects of increasing fuel prices.
E)to satisfy federal requirements for a lawful citizenship.

Question 31

Which of the following statements regarding companies that sell insurance directly to consumers is true?

A)Their insurance agents review the loss claims and file a lawsuit against the negligent party.
B)They hire only Certified Insurance Counselors as their captive agents.
C)Their premiums are generally lower than for companies that sell insurance through agents.
D)They reimburse a higher amount of insurance claims than the companies that sell insurance through agents.
E)Their deductibles are lower than the companies that sell insurance through agents.

Question 32

An insured does not get the right to arbitration when the:

A)insurance company denies responsibility for the loss.
B)loss is of a relatively small value.
C)claim is assigned to a claims adjustor.
D)insured leaves the scene of the accident.
E)insured has made several claims from the insurance company.

Question 33

When insuring property, people need to consider not only replacing and restoring the actual property in the event of a loss, but also the:

A)liability arising from the insured's responsibility for property loss.
B)construction cost of the property.
C)home equity in the property.
D)excess compensation claim for loss to the property.
E)time used to construct objects.

Question 34

A $300,000\$500,000 bodily injury liability automobile policy could pay _____ to all injured victims in one accident.

A)up to a total of $300,000
B)up to a total of $200,000
C)up to a total of $500,000
D)up to a total of $800,000
E)an unlimited award

Question 35

A higher home insurance cost may result from:

A)a low crime rate in the area of the insured's residence.
B)a low credit score of the insured.
C)fewer insurance claims from the area of the insured's residence.
D)the lack of a swimming pool at the insured's residence.
E)fewer captive insurance agents hired by the insurance company.

Question 36

The _____ is a good homeowner's policy for a condominium owner.

A)HO-2
B)HO-3
C)HO-4
D)HO-6
E)HO-1

Question 37

A homeowner's policy does not provide protection for:

A)the personal property of family members at home.
B)the personal property of family members who are in college.
C)a business unit's property valued below $2,500 while it is on the insured premises.
D)the personal property of tenants.
E)the personal property of family members who are traveling.

Question 38

Part A liability coverage under a personal automobile policy may be viewed as "following":

A)the insured.
B)the family members of the insured.
C)the holder of an auto loan.
D)the vehicle.
E)anyone involved in the accident.

Question 39

Comprehensive automobile coverage refers to:

A)complete coverage including liability, medical payments, and damage to the automobile.
B)coverage for damage to an insured automobile from perils (with a few exceptions)other than collision.
C)coverage that adds items of personal property, such as CB radios and telephones, that are ordinarily excluded.
D)coverage for bodily injuries suffered in an automobile accident.
E)coverage for damage due to a multi-car collision.

Question 40

Even though homeowners are eligible for reimbursement on a full replacement-cost basis if they keep their homes insured for at least 80% of the amount that it would cost to build them today, _____ can cause the actual amount of coverage to fall below 80%.

A)the replacement cost
B)inflation
C)the insurance premium
D)deductibles
E)the land value

Question 41

To purchase a personal liability umbrella policy, the insured party must already have:

A)federally subsidized flood insurance coverage.
B)relatively high liability limits on their homeowner's and auto coverage.
C)high levels of personal debt.
D)made several claims with the insurance company.
E)a poor driving record.

Question 42

The first step in buying property and liability insurance is to develop a(n):

A)list of insurance agents offering insurance.
B)inventory of exposures to loss.
C)statement of premiums of five different insurance companies.
D)list of floater policies.
E)replacement cost for your property.

Question 43

At the scene of an accident, the police are only responsible for assessing the:

A)amount of loss.
B)amount of claim.
C)liability of the insurance company.
D)probability of a law violation.
E)extent of any injuries.

Question 44

An insurance company assigns more complex loss cases to a:

A)captive insurance agent.
B)claims adjustor.
C)Chartered Property and Casualty Underwriter.
D)Certified Insurance Counselor.
E)court investigator.

Question 45

A personal liability umbrella policy is more likely to be opted for by people:

A)who cannot afford a basic health policy.
B)who cannot afford basic homeowner's and automobile insurance.
C)with a moderate to high level of income and net worth.
D)with a low level of income and net worth.
E)who have recently retired or experienced a drop in income.

Question 46

A(n)_____  agent represents multiple insurance companies.

A)captive
B)business
C)casualty
D)independent
E)dealer's

Question 47

It pays to comparison shop for insurance policies because of the:

A)subsidized deductible options.
B)different educational qualifications of the captive agents.
C)large variations in premiums and services.
D)different legal liabilities of insurance agents.
E)high cost of insurance.