Deck 10: Property and Liability Insurance

Question 1

Renter's insurance includes liability insurance.

Answer 1

False

Question 2

Your backyard shed was damaged by a windstorm. Your coverage is based under Coverage D: Loss of Use.

Answer 2

False

Question 3

Which of the following is not a consideration in determining the amount of homeowner's insurance a person needs?

A) Cover the entire replacement cost in the event of a complete loss.
B) Match the insurance coverage of similar homes in your neighborhood.
C) Protect against the effect of inflation eroding away your coverage.
D) Purchase flood or earthquake coverage if you are in an area prone to these occurrences.
E) Determine if detached structures are adequately covered under standard policies.

Answer 3

Match the insurance coverage of similar homes in your neighborhood.

Question 4

Your boyfriend is living in an apartment complex that has had a recent rash of robberies. He has $5,000 worth of rare coins. What should he do to protect himself in case of a robbery?

A) Take a written and video tape inventory of his property.
B) Add a personal articles floater to his policy.
C) Take out personal property replacement cost coverage.
D) Only B and C above
E) A, B, and C above

Question 5

An attached garage is covered under Coverage B: Other structures.

Question 6

While you were walking your dog, she bit a child. Medical treatment for the child would fall under Coverage C: Personal Property

Question 7

Flood protection insurance is generally administered and subsidized by the federal government through the Department of Housing and Urban Development.

Question 8

You have recently inherited a sum of money. You are purchasing an old Victorian home which was built in 1856. The type of insurance needed on the house would be

A) HO-1.
B) HO-4.
C) HO-6.
D) HO-8 .

Question 9

An HO-4 policy is a renter's insurance policy that protects the renter's personal property.

Question 10

Personal liability insurance protects you from financial losses incurred if someone is injured on your property or as a result of your actions.

Question 11

Brandi thought it quite funny to have a decorative outhouse put on her property as a conversation piece. This structure is covered under Coverage A: Dwelling on her home owners policy.

Question 12

Property insurance protects you from the financial risk associated with property losses.

Question 13

John Meadow rents an apartment and wants tenant's insurance or an ________ policy.

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

Question 14

Your apartment building burned down while you were on vacation. Fortunately, you have renter's insurance. What will your policy cover?

A) Any damages to the building structure.
B) Your neighbor's personal property.
C) Your hotel and additional expenses based on a percentage of your property coverage.
D) All of the above are correct.
E) None of the above are correct.

Question 15

In the United States, the first type of homeowner's insurance was fire insurance,
offered in 1935 by a small company in Charleston, South Carolina.

Question 16

An HO-3 policy is a special form of homeowner's insurance policy that offers open perils protection except for those perils specifically excluded.

Question 17

The purpose of a personal umbrella policy, as an addition to your homeowner's policy, is primarily to protect you from

A) acts of God, such as falling objects, hail, etc.
B) flood damage.
C) lawsuits and judgments.
D) faulty construction of your home.
E) contested title to your property.

Question 18

John Murphy experienced a freak storm that damaged his roof and allowed water to leak into the house. The agent and adjuster said the peril was not covered under his HO-2 policy. John wishes he had taken out an ________ policy.

A) HO-1
B) HO-3
C) HO-4
D) HO-5
E) HO-6

Question 19

Angela's home became overrun with termites. She had to stay in an apartment temporarily while her home was being fixed. The provision on her home owners policy that covers her expenses while she is not able to live in her home is known as: Coverage D: Loss of Use.

Question 20

The inflation guard endorsement on your homeowners insurance policy automatically decreases your policy premiums each year due to the inflation rate.

Question 21

The replacement value of the house less accumulated depreciation (which is the decline in value over time due to wear and tear) is known as ________.

A) actual cash value
B) replacement value
C) market value
D) depreciation
E) none of the above

Question 22

When you purchase a(n) ________, you are obtaining an extension to a homeowner's insurance policy that provides coverage for all personal property regardless of where it is located.

A) uninsured property addendum
B) property addendum
C) personal rider
D) personal articles floater
E) none of the above

Question 23

If you wanted to obtain an endorsement that automatically updates the level of property coverage based on an index of replacement costs that continually updates the cost of building a home, you would ask for a(n)

A) inflation guard.
B) automatic adjustment policy.
C) replacement cost index.
D) continual adjustment policy.
E) none of the above

Question 24

On your home owners policy ________ protects any personal property that's owned or used by the policyholder, regardless of the location of this property. In other words, if you're on a vacation in Hawaii and someone hits you with a pineapple and steals your suitcase, your personal property is still covered.

A) Coverage A
B) Coverage B
C) Coverage C
D) Coverage D
E) none of the above

Question 25

Alfred lost his 3 year old camera. It cost him $200 three years ago and had a life expectancy of 6 years. Alfred has actual cash value insurance on this camera which means his insurance company will issue him a check for ________ for his loss. A new camera costs $500.

A) $100
B) $200
C) $500
D) none of the above

Question 26

Explain Section I: Property Coverage for HO-2 and HO-3 policies.

Question 27

Reggie was hosting a BBQ when the deck fell off his house. Several of his friends were hurt in the accident. Luckily for Reggie he has ________ coverage on his home owner's insurance.

A) personal articles
B) loss of use
C) personal liability
D) None of the above

Question 28

Suppose burglars trashed your apartment and stole your personal property. Your rent is $350 per month and you had to live in another apartment house for two months while the landlord had the apartment put back into livable condition. Under which section of an HO policy would you be covered and how much would you recover because of the move?

A) Section I coverage C, $350
B) Section I coverage C, $700
C) Section I coverage D, $350
D) Section I coverage D, $700
E) Section II coverage, $350

Question 29

Amy Lambert's home is insured for $85,000 and her detached garage is destroyed by a windstorm. She hopes to collect $11,850 under her homeowner's policy. What will happen?

A) Amy will receive $11,850 under Coverage B: Other structures
B) Amy will receive $11,850 under Coverage A: Dwelling
C) Amy will receive $8,850 under Coverage B: Other structures
D) Amy will receive $8,850 under Coverage A: Dwelling
E) Amy will receive $11,850 under Coverage C: Personal property

Question 30

What is the main difference between replacement cost coverage and actual cash value coverage?

A) Replacement cost coverage does not consider depreciation.
B) Actual cash value does not consider depreciation.
C) Replacement cost coverage requires an endorsement to your policy
D) All of the above are correct.
E) Only A and C are correct.

Question 31

Supplemental coverage for homeowner's insurance is available through endorsements. Which one of the following is not a common form of additional coverage?

A) personal articles floaters
B) earthquake coverage
C) flood protection
D) medical payments
E) inflation guard

Question 32

You have the most popular house on the block for the neighborhood children to play at. You have a trampoline, tree fort and jungle gym. Your family also has two large German shepherd dogs. What should you consider given the described situation?

A) Purchasing personal property replacement cost coverage.
B) Purchasing earthquake coverage.
C) Purchasing an umbrella policy.
D) None of the above.

Question 33

Provide an explanation of Section II: Personal Liability Coverage.

Question 34

Describe each of the six HO packaged policies. Which one is the most common?

Question 35

The disadvantage of actual cash value coverage of personal property compared to replacement cost coverage is that it

A) will reimburse you for replacement cost minus estimated depreciation.
B) will reimburse you for the cash value of a new item.
C) must be reported as a loss on your tax return.
D) does not have to be reported as a loss on your tax return.
E) none of the above

Question 36

Wilber Robinson found out that his homeowner's coverage comes in handy when a neighbor steps on a garden rake and it flips up and causes a concussion. Josh did just that and spent two weeks in the hospital running up a $23,000 bill. Josh was covered under

A) section II medical payments.
B) section II personal liability.
C) section I loss of use.
D) added liability insurance.
E) the 80 percent rule.

Question 37

Insurers in California are required to offer ________ coverage to consumers due to the substantial risk factors in that state.

A) renters
B) liability
C) inflation
D) earthquake
E) bankruptcy

Question 38

Your best friend's apartment has just been robbed, and he had no insurance. What would you suggest to your friend to better protect himself from such losses in the future?

A) Purchase renter's insurance and add a personal articles floater.
B) Take out personal property replacement cost coverage.
C) Take a written and video tape inventory of your property.
D) Only B and C above
E) A, B, and C above

Question 39

Coverage A: Dwelling protects

A) personal property in a dwelling.
B) unattached structures on the dwelling site.
C) your home.
D) any attachments to your home.
E) both C and D above

Question 40

Antoine LaDuke suffered a major loss on his older home due to mud from a flood. Although he had homeowner's insurance, what was the probable reason he was not covered?

A) His home was probably too expensive.
B) His policy excluded flood-related damages.
C) This is a personal liability issue.
D) Older homes are excluded from flood-related damages.

Question 41

The coinsurance provision requires that the insurance company will pay a portion of your financial losses in the event of a catastrophe.

Question 42

One way to lower the premiums you pay on your insurance is to have a higher deductible.

Question 43

Pretend you are an insurance agent. Explain the coinsurance and 80 percent rule to a client.

Question 44

Your home and property have a market value of $240,000. To meet the coinsurance provision, you would need at least ________ of insurance.

A) $144,000
B) $168,000
C) $192,000
D) $216,000
E) none of the above

Question 45

The ________ is the amount that you agree to pay before insurance coverage kicks in.

A) pro rata share
B) gratis
C) allowance
D) deductible
E) none of the above

Question 46

Your home and property have a market value of $200,000. Since you want to make sure that you meet the coinsurance provisions, you should have at least ________ of insurance.

A) $160,000
B) $180,000
C) $200,000
D) $220,000
E) none of the above

Question 47

Eric and Lisa Lambert are purchasing a home for the first time. Their insurance company wants them to insure at least ________ of the home's full replacement cost.

A) 70%
B) 75%
C) 80%
D) 85%
E) 90%

Question 48

Describe the difference between actual cash value and replacement value.

Question 49

Most companies allow six endorsements or supplemental coverages to meet their customers' needs. Name and describe the six. Which one is unique and stands apart from the others?

Question 50

Lisa and Eric want to keep the cost down on the homeowner's insurance they will need. After talking to their parents they developed a list of ways to do so. Identify the one mistake on it.

A) Take as high a deductible as you can afford to self insure.
B) Install an adequate security system.
C) Pay your insurance premiums quarterly.
D) Install adequate smoke detectors.
E) Insure your cars with the homeowner's company.

Question 51

A lower insurance credit score generally results in lower homeowner's insurance rates.

Question 52

Lisa and Eric were notified that replacement cost coverage is in effect on a home owner's policy only if the home is insured for at least 80% of its replacement cost. This provision is known as the ________.

A) Replacement Cost Rule
B) 80 Percent Rule
C) Replacement Cost Provision
D) none of the above

Question 53

Which of the following statements is true?

A) The lower your insurance credit score, the higher your homeowner's insurance rate will be.
B) The higher your insurance credit score, the higher your homeowner's insurance rate will be.

Question 54

Your insurance credit score depends on, among other things, your payment history and the types of credit used.

Question 55

Suppose Lisa and Eric do not purchase an adequate amount of insurance on their home. In the event of a claim, they would pay a portion of it. This is the

A) inflation guard.
B) added liability.
C) replacement cost.
D) coinsurance provision.
E) 70 percent rule.

Question 56

Which of the following statements best describes the 80 percent rule?

A) Your home is covered for 80 percent of its original value, regardless of replacement cost.
B) Your home is covered for replacement cost, provided the total premiums paid are less than 80 percent of the outstanding premiums due.
C) Replacement cost coverage is only effective if your home is insured for at least 80 percent of its replacement cost.
D) Your house cannot be replaced if its replacement cost is less than 80 percent of assessed market value.
E) none of the above

Question 57

Since most homeowners' claims are for relatively small amounts, high deductibles will keep your insurance costs down.

Question 58

What factors are considered when insurance companies decide what rates to charge you for homeowner's insurance?

A) Whether you have an in-home sprinkler system.
B) What type of building materials were used in the house.
C) Your credit score.
D) All of the above are correct.
E) All but B are correct.

Question 59

What determines the cost of your homeowner's insurance?

A) the location of your home
B) the type of structure
C) the level of coverage and policy type
D) All of the above

Question 60

Barbara is over 55 so she qualifies for additional home owner's insurance discounts.

Question 61

Your written or video inventory of your assets should be kept in a safe place such as a lock box at your bank.

Question 62

Outline the considerations for choosing the amount of homeowner's insurance you need.

Question 63

For structural damage to your dwelling, it would be a good idea to request for an estimate from a qualified contractor before accepting the check from your insurance company.

Question 64

While transporting your TV to the repair shop, someone stole it from your car. Your TV is covered under your homeowner's coverage.

Question 65

In the event of a loss you should do all of the following except

A) report your loss immediately.
B) refrain from making any repairs until the claims adjuster has seen the damage.
C) make a detailed list of everything that is lost or damaged.
D) maintain records of the insurance settlement process.

Question 66

Give the three basic factors that determine the cost of your homeowner's insurance. List the possible ways of saving money on premiums.

Question 67

A homeowner's personal inventory will help you maximize your insurance claims in case of loss.

Question 68

Your laptop computer was stolen out of your car at school. It will be covered under your PAP.

Question 69

Your home is hit by a strong wind storm that causes serious damage to one end of it. The rest of your home is livable. What do you do?

Question 70

With no-fault insurance you can still sue for "pain and suffering" but only if the other driver was at fault.

Question 71

Since there were no witnesses to the robbery at your apartment, there is no reason to contact the police.

Question 72

It is possible to have a different deductible for collision loss than you have for comprehensive physical damages.

Question 73

Your home was damaged by a hail storm. This will require a police report in order for you to file a claim.

Question 74

With PAP coverage, if you're driving a car you don't own, your medical expenses won't be covered but those of other injured passengers or pedestrians will be.

Question 75

While you were visiting a friend, someone robbed their apartment and stole your laptop computer. Unfortunately, they did not have renter's insurance. Where can you look for help to replace your computer?

A) The landlord's loss of use coverage.
B) Your homeowner's insurance policy.
C) Your friend through small claims court.
D) None of the above are correct.

Question 76

To effectively collect on a loss when filing a homeowner's claim, the first step should be

A) to make temporary repairs to protect your property.
B) confirm the adjuster's estimate.
C) make a detailed list of everything lost or damaged.
D) maintain records of the insurance settlement process, especially expenses.
E) report your loss to your insurance agent, and the police if applicable.

Question 77

Felix's $2,000 TV was stolen. He has no record of its purchase, however, he knows his insurance company will reimburse him the full value of the TV.

Question 78

You should not alter or repair any physical damages to your property until after the claims adjuster has investigated the loss.

Question 79

To be properly reimbursed for the loss of personal property in your home, you should take a written inventory of household contents and a video tape of these contents. You should have a written description and an oral description that includes which of the following?

A) date of purchase
B) the cost of each item
C) model number and brand name
D) serial number
E) all of the above

Question 80

To make sure all of your personal property is paid for in the event of a loss, it is a good idea to make an inventory of all household contents. Tell what should be included.