Deck 10: Protecting Your Property

Question 1

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

Answer 1

False

Question 2

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

Answer 2

A

Question 3

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.

Answer 3

D

Question 4

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

Question 5

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

Question 6

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

Question 7

The premiums for homeowners' insurance policies are based on the size of the deductible,any policy limits,and the standard coverage.

Question 8

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 9

Earthquakes are covered under most homeowner's insurance policies.

Question 10

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 11

The principle of indemnity will prevent:

A)the act of one person from being imputed 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 12

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 13

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 14

Which of the following homeowners' 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 15

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

Question 16

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

Question 17

Which of the following homeowners' 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 18

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

Question 19

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

Question 20

Which of the following homeowners' 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

Question 21

The best way to buy automobile insurance is through __________. ​

A)an insurance agent
B)a state insurance commission
C)an auto dealer
D)a finance company

Question 22

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

Question 23

The liability coverage under a personal automobile policy is provided to:

A)the insured for damage.
B)the family members of the insured.
C)the holder of an auto loan.
D)the lawyer needed to defend criminal charges.
E)the non-family members involved in the accident.

Question 24

Auto insurance is needed primarily:

A)to finance automobile maintenance.
B)as protection against potential liability claims.
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 25

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

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 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 26

Homeowners are eligible for reimbursement on a full replacement-cost basis only if they keep their homes insured for at least __________ of the amount that it would cost to build them today. ​

A)80 percent
B)20 percent
C)100 percent
D)50 percent

Question 27

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

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

Question 28

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 2002 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 29

A factor that is likely to have the greatest effect on the cost of automobile insurance is the __________. ​

A)distance covered by the insured car
B)lessee of the insured car
C)owner's academic grades
D)owner's driving record

Question 30

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 31

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 32

A personal liability umbrella policy typically includes:

A)subsidies for flood insurance established in cooperation with a private insurance agent.
B)coverage for auto-related liability losses in excess of the limits purchased in the 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 33

A captive agent is:

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

Question 34

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 35

An insured does not get the right to arbitration when:

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

Question 36

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

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

Question 37

Standard homeowner's policies will not include coverage for damage done by __________. ​

A)fire
B)flood
C)lightning
D)wind

Question 38

Replacement-cost coverage is the reimbursement of:

A)the cost of repairing or replacing damaged structures without deducting physical 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 39

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

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

Question 40

A $100,000/$300,000 bodily injury liability automobile policy could pay up to a total of __________ to all injured victims in one accident. ​

A)$100,000
B)$400,000
C)$300,000
D)$200,000

Question 41

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

Question 42

A personal liability umbrella policy is more likely to be opted for by __________. ​

A)people who cannot afford a basic health policy
B)people who cannot afford a basic homeowner's and automobile insurance
C)people with high incomes and high net worth
D)people with low incomes and low net worth

Question 43

A(n)__________ agent represents multiple insurance companies. ​

A)captive
B)business
C)casualty
D)independent

Question 44

At the scene of an accident,the police are only responsible for assessing __________. ​

A)the amount of loss
B)the amount of claim
C)the liability of the insurance company
D)the probability of a law violation

Question 45

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

Question 46

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

Question 47

A personal liability umbrella policy is designed to __________. ​

A)supplement homeowner's insurance coverage
B)establish a subsidized flood insurance program
C)replace homeowner's insurance coverage
D)subsidize the health insurance coverage

Question 48

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