Deck 10: Property and Motor Vehicle Insurance

Question 1

Increased liability insurance is available with an umbrella policy.

Answer 1

True

Question 2

The most common method of dealing with risk is to shift, or transfer it to an insurance company or some other organization.

Answer 2

True

Question 3

The purpose of insurance is to help protect you and your family against financial hardship due to hazard, accident, death, and similar risks.

Answer 3

True

Question 4

The 100/300 amounts for bodily injury liability insurance refer to the costs of insurance coverage.

Question 5

The purpose of a household inventory is to provide evidence of items covered by home insurance.

Question 6

A home made of wood is more expensive to insure than a comparable brick structure.

Question 7

The purpose of an assigned risk pool is to assist people with poor driving records in obtaining automobile insurance coverage.

Question 8

The driver classification category is based on automobile style, model, and value of the vehicle.

Question 9

Most speculative risks are considered to be uninsurable.

Question 10

Risk management is an organized strategy for protecting and conserving assets and people.

Question 11

Personal belongings that have a high value require coverage with a personal property floater.

Question 12

Replacement cost for settling property insurance claims is less costly than the actual cash value method.

Question 13

Self-insurance is the process of establishing a monetary fund that can be used to cover the cost of a loss.

Question 14

No-fault insurance systems have consistently reduced the time and costs involved in settling claims.

Question 15

Medical payments coverage in a home insurance policy is designed to pay for legal action taken against a homeowner who may be legally responsible for injury or property damage of others.

Question 16

The comprehensive form of homeowner's insurance includes coverage for damage due to floods.

Question 17

Homeowner's insurance refers to coverage also available to condominium owners.

Question 18

Property damage liability coverage would pay for damage to another vehicle for which you were at fault.

Question 19

Property losses can be categorized into destruction of property, and losses due to robbery, burglary, vandalism, or arson.

Question 20

Medical payments automobile insurance coverage pays for the costs of injuries to persons in the driver's vehicle.

Question 21

Defective house wiring is an example of a:

A) hazard.
B) peril.
C) risk.
D) speculation.
E) planned danger.

Question 22

Which of the following is considered personal property for home insurance coverage?

A) Automobile
B) Garage
C) Furniture
D) House
E) Trees and shrubs

Question 23

Negligence refers to:

A) failure to take ordinary and reasonable care.
B) cancellation of insurance.
C) property damage.
D) high risk insurance coverage.
E) common hazards in our society.

Question 24

The legal responsibility for the financial cost of another person's losses or injuries is referred to as:

A) theft.
B) robbery.
C) liability.
D) assigned risk.
E) collusion.

Question 25

The ____________ coverage of a home insurance policy would cover accidental damage to another person's property by a member of your family.

A) supplementary
B) personal property
C) medical payments
D) additional living expenses
E) voluntary liability

Question 26

An umbrella policy is designed to cover:

A) expensive personal property.
B) additional buildings on your property.
C) property when traveling away from home.
D) major personal liability suits.
E) flood damage.

Question 27

The uncertainties of direct and indirect losses to personal or real property due to fire, wind, accident, theft, etc., are called ____________ risks.

A) personal
B) business
C) property
D) liability
E) speculative

Question 28

Which of the following would be covered by a home insurance policy?

A) Hospital expenses for surgery
B) Damage to another person's car when driving
C) Accidental injury to a coworker on the job
D) Wind damage to your roof
E) Theft of business supplies from your office

Question 29

Peril is defined as:

A) the refusal by an insurance company to pay for a loss.
B) the cause of risk.
C) the cause of a possible loss.
D) an uncertainty as to loss.
E) safety.

Question 30

Possible losses due to negligence resulting in bodily harm or property damage to others are called ____________ risks.

A) speculative
B) liability
C) property
D) personal
E) commercial

Question 31

Most home insurance policies provide coverage for:

A) earthquake damage.
B) flood damage.
C) an umbrella liability.
D) personal property floaters.
E) medical payments.

Question 32

If a homeowner leaves toys on stairs that results in injury to a delivery person, this may be ruled as:

A) vicarious liability.
B) negligence.
C) assigned risk.
D) umbrella coverage.
E) coinsurance.

Question 33

The additional living expenses component of a home insurance policy is designed to:

A) pay for temporary housing while your home is repaired.
B) cover damage to property while away from home.
C) reimburse a homeowner for damage done by a visitor.
D) pay for medical expenses of people injured on your property.
E) pay for repairs caused by fire or other hazards.

Question 34

Starting a small business that may or may not succeed is an example of ___________ risk.

A) speculative
B) pure
C) commercial
D) personal
E) liability

Question 35

Georgette Valentine has expensive photography equipment for use in her hobby. Which one of the following types of coverage would pay for damage or theft of this equipment?

A) Umbrella policy
B) Personal liability
C) Additional living expense coverage
D) Personal property floater
E) Coinsurance floater

Question 36

Wearing a seat belt in an automobile to protect yourself against injury is an example of ____________ risk.

A) reducing
B) assuming
C) pooling
D) shifting
E) avoiding

Question 37

Using a home security system is an example of ____________ risk.

A) shifting
B) accepting
C) reducing
D) sharing
E) transferring

Question 38

High winds cause damage to trees, shrubs, and other plants. This insurance claim would be covered under the ____________ component of homeowner's insurance.

A) additional living expenses
B) personal property
C) building and other structures
D) personal liability
E) property damage

Question 39

The purpose of a household inventory is to:

A) reduce insurance costs.
B) document owned property.
C) obtain personal property floater coverage.
D) increase liability coverage.
E) lower the chance of negligence.

Question 40

While cleaning your home, a worker damages some furniture. You take action against the worker's employer to cover the cost of the damage. This is an example of a(n) ____________ liability.

A) umbrella
B) assigned
C) common situation
D) peril
E) vicarious

Question 41

The purpose of financial responsibility laws is to:

A) reduce auto insurance costs.
B) assist poor drivers in getting insurance coverage.
C) protect the public from financial losses due to auto accidents.
D) require uninsured motorists coverage.
E) help drivers with a clean driving record.

Question 42

Henry Edwards was injured in an accident caused by another driver who did not have insurance. Henry's medical expenses would be covered by:

A) medical payments.
B) collision.
C) bodily injury liability.
D) uninsured motorists protection.
E) no-fault coverage.

Question 43

Your home insurance provides for replacement value for personal property losses. A microwave is stolen. It cost $300 two years ago and has an expected life of six years. A comparable microwave costs $400 today. What amount will the insurance company pay?

A) $100
B) $150
C) $200
D) $350
E) $400

Question 44

Which one of the following coverages would pay for medical care for people who were injured in your automobile?

A) Medical payments
B) Bodily injury liability
C) Collision
D) Uninsured coverage
E) Underinsured coverage

Question 45

Your home insurance policy has a $250 deductible. If a small fire causes $600 damage to your home, what amount of the claim would the insurance company pay?

A) $250
B) $350
C) $450
D) $600
E) Not able to determine from this information

Question 46

The ____________ method to settle claims is based on the current replacement cost of a damaged or lost item less depreciation.

A) replacement value
B) actual cash value
C) umbrella
D) endorsement
E) personal property floater

Question 47

____________ provides coverage for the risk of financial loss due to legal expenses, medical expenses, lost wages, and other expenses associated with injuries caused by an automobile accident for which you were responsible.

A) Medical payments
B) Bodily injury liability
C) Uninsured motorists protection
D) No-fault insurance
E) Comprehensive insurance

Question 48

Which form of homeowner's policy provides coverage for the most risks?

A) Special
B) Basic
C) Broad
D) Tenants
E) Modified coverage

Question 49

The 100 in 100/300/50 refers to:

A) property damage liability coverage.
B) the amount of the deductible.
C) collision coverage.
D) the total coverage for an accident.
E) the limit for bodily injury claims that can be paid to one person.

Question 50

Which one of the following insurance policy provisions requires the insured to pay for part of the loss if the property is not insured for the specified percentage of replacement value?

A) Personal property floater
B) An endorsement
C) Coinsurance clause
D) Umbrella coverage
E) Assigned risk clause

Question 51

Kelly and Bob Walton recently purchased a new home and desire coverage for all causes of loss or damage except those specially excluded by the policy. They should obtain the ____________ form of homeowner's policy.

A) basic
B) broad
C) special
D) modified coverage
E) condominium

Question 52

The 25 in 50/100/25 refers to ____________ coverage.

A) collision
B) bodily injury liability
C) comprehensive physical damage
D) medical payments
E) property damage liability

Question 53

Renter's insurance would include coverage for:

A) flood damage.
B) personal property.
C) building and other structures.
D) umbrella liability.
E) earthquake damage.

Question 54

Which one of the following types of coverage would pay for damage to your automobile in an accident for which you were at fault?

A) Property damage liability
B) Collision
C) Comprehensive physical damage
D) No-fault insurance
E) Assigned risk pool coverage

Question 55

Comprehensive coverage would cover financial losses due to:

A) injuries caused by a driver without insurance.
B) damage to your car in an accident for which you were at fault.
C) damage to your car caused by wind or hail.
D) legal action against you for an accident.
E) damage to a neighbor's tree caused by your car.

Question 56

____________ protects you against financial loss when your car damages the property of others.

A) Collision
B) Comprehensive physical damage
C) Property damage liability
D) No-fault insurance
E) Assigned risk coverage

Question 57

Home insurance costs are affected most directly by:

A) the profits of the insurance company.
B) insurance agents' commission.
C) government regulations that set premiums.
D) processing costs of claims.
E) the number of claims in an area.

Question 58

Which of the following is a system in which drivers involved in an accident collect medical expenses, lost wages, and related injury costs from their own insurance company?

A) Assigned risk pool
B) Financial responsibility coverage
C) Comprehensive system
D) No-fault insurance
E) Uninsured motorists protection

Question 59

____________ coverage would pay for damage to your vehicle caused by an accident when another driver with insurance was legally at fault.

A) Property damage liability
B) Collision
C) Comprehensive physical damage
D) Uninsured motorists protection
E) Assigned risk

Question 60

Which one of the following is not covered by renter's insurance?

A) Medical expenses for injuries to visitors
B) Fire damage to the building's roof
C) Additional living expenses
D) Accidental damage to the property of others
E) Cost of legal action due to personal liability

Question 61

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?

A) $100
B) $200
C) $500
D) $700
E) $800

Question 62

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:

A) no-fault insurance.
B) an assigned risk pool.
C) premium discounts.
D) equal opportunity insurance.
E) comprehensive coverage.

Question 63

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:

A) peril.
B) hazard.
C) risk.
D) premium.
E) liability.

Question 64

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?

A) Buildings and other structures
B) Additional living expenses
C) Personal property
D) Personal liability
E) Specialized coverage

Question 65

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?

A) Avoidance
B) Reduction
C) Assumption
D) Shifting
E) Creation

Question 66

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:

A) peril.
B) hazard.
C) risk.
D) premium.
E) deductible.

Question 67

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

A) Avoidance
B) Reduction
C) Assumption
D) Shifting
E) Development

Question 68

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?

A) Buildings and other structures
B) Additional living expenses
C) Personal property
D) Personal liability
E) Specialized coverage

Question 69

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

A) driver classification
B) assigned risk pool
C) coverage level
D) legal responsibilities
E) rating territory

Question 70

The purpose of an assigned risk pool is to:

A) provide insurance for poor drivers.
B) reduce medical costs associated with auto accidents.
C) take unsafe drivers off the road.
D) reduce auto insurance premiums with state regulation.
E) offer premium discounts to safe drivers.

Question 71

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:

A) peril.
B) hazard.
C) risk.
D) premium.
E) liability.

Question 72

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?

A) Avoidance
B) Reduction
C) Assumption
D) Shifting
E) Creation

Question 73

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?

A) Rating territory
B) Assigned risk pool
C) No-fault system
D) Driver classification
E) Rating tiers

Question 74

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

A) Age
B) Type and age of vehicle
C) Claims in your geographic area
D) Insurance company claim processing costs
E) State insurance premium regulations

Question 75

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?

A) Buildings and other structures
B) Additional living expenses
C) Personal property
D) Personal liability
E) Specialized coverage

Question 76

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:

A) peril.
B) hazard.
C) risk.
D) premium.
E) policy.

Question 77

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?

A) Building and other structures
B) Additional living expenses
C) Personal property
D) Personal liability
E) Specialized coverage

Question 78

Thad Joslin was judged at fault in an automobile accident. Three others were awarded damages of $150,000, $75,000, and $75,000. Thad has 100/300 bodily injury liability coverage. What amount, if any, would not be covered by his insurance?

A) $150,000
B) $100,000
C) $50,000
D) $25,000
E) None. The total amount would be covered by insurance.

Question 79

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?

A) Buildings and other structures
B) Additional living expenses
C) Personal property
D) Personal liability
E) Specialized coverage

Question 80

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?

A) Avoidance
B) Reduction
C) Assumption
D) Shifting
E) Assessment