FIN 1060 Ch. 8

Some policies may limit the additional living expense coverage to:

10 to 20 percent of the home's coverage amount.

According to the text, you should consider automobile insurance coverage of $50,000 up to $ _____ for property damage liability.

100,000

In the past, most homeowner's policies contained a provision requiring that the building be insured for at least ______ of the replacement value

80 percent

The main bodily injury coverages are bodily injury liability, mortgage payments coverage, and uninsured motorist's protection.

False

Which of the following is true of your personal insurance program?

It should change along with your needs and goals.

Which of the following are risk avoidance actions?

Making sure you do not face product failure by not manufacturing new products

_____ is anything that may possibly cause a loss.

Peril

When we set up a special fund to cover the cost of a loss, we are self-insuring.

True

Your driver classification is one of the main factors that affects the premium for your vehicle insurance.

True

Which of the following is a type of policy that supplements your basic personal liability coverage and provides protection for all kinds of personal injury claims?

Umbrella

Which of these strategies help reduce the financial impact of a disability?

Using Medicare and Medicaid

An additional property insurance that covers the damage or loss of a specific item of high value is known as:

a personal property floater.

Your insurance protection for your home should be based on the amount needed to _____ or repair your house and not the amount you originally _____ for the home.

fix, paid

Risk management is a(n) ________.

long-range planning process

The main influences on the _____ paid for home and property insurance include location, type of structure, and policy type.

premium

Shifting of _____ is done through the purchase of an insurance policy.

risk

The chance of loss or injury is referred to as:

risk

The most common method of dealing with risk is to _____ it, which means to transfer it to an insurance company.

shift

When insurance companies take on the risk of loss or injury, it refers to the fact that no one can predict:

trouble

Not buying flood insurance on a house is an example of risk assumption.

true

Insurance for your home should cover the amount you paid for the home.

False

is failure to take ordinary or reasonable care in a situation.

Negligence

The price paid for insuring your home and your car should be thought of as:

an investment for protecting your resources.

Wage loss insurance will reimburse you for:

any salary or income lost due to injury in an automobile accident

Which of the following are general risk management techniques?

avoidance reduction assumption

The two main categories of automobile coverage are:

bodily injury property damage

The two standard renter's insurance policies are broad form and _____ form.

comprehensive

Additional living expenses that result from a home fire or other home damage are:

costs for you to stay in a motel or a rented apartment while your home is being fixed.

Your insurance _____ _____ is based on your gender, age, and driving record.

driver classification

The strategies for reducing the financial impact of illness include:

purchasing health insurance.

The most common method of dealing with risk is to:

risk shift.

The best risk management plans are flexible enough to handle life's changing situations.

true

Comprehensive physical damage insurance for your car covers damage to your vehicle if you are at fault in an accident with another vehicle.

False

A _____ is anything that increases the likelihood of loss through some peril.

Hazard

_____ is protection against possible financial loss that allows you to be prepared for the worst.

Insurance

Which of the following is true regarding insurance?

Insurance is not the only way of dealing with risk.

A household inventory is a list or other documentation of personal belongings with purchase dates and cost information.

True

The main bodily injury coverages are:

uninsured motorist's protection bodily injury liability medical payments coverage

According to the text, the amount of property damage liability coverage that is suggested is:

$50,000 to $100,000.

What coverage pays for you to stay somewhere else in the event of fire or other damage to your home?

Additional living expenses coverage

Which of the following are factors in setting a driver classification?

Age and sex Driving record Marital status

Homeowner's insurance does not cover injuries to people on property.

False

Purchasing insurance is the only way to manage risk.

False

Risk management needs are the same throughout one's life.

False

Your insurance probably costs less if you live in a large city versus in a rural location.

False

Which of these strategies help reduce the financial impact of a disability?

Savings and investments

Which of the following are risk assumption actions?

Self-insuring

The coverage of HO-3 policies includes which of the following perils?

Smoke Windstorms Fire and lightning Theft

Liability coverage is usually expressed by three numbers, such as 100/300/50. In this example, what does the "50" represent?

The limit for payment for damage to the property of others is $50,000.

According to the text, your homeowner's insurance covers damage to your home and any other structures on your property.

True

The coverage of tenants form HO-3 covers damages to personal property from all of the following perils except:

War

Insurance companies require that in order to have the personal property floater, the insured must have:

a detailed description of the item insured. the item appraised and evaluated by an expert.

An umbrella policy will cover the insured for:

additional personal liability coverage

An umbrella policy will cover the insured for:

all kinds of personal injury claims. supplementing the coverage of personal liability. damaging the reputation of another.

The amount of _____ and type of _____ affect the cost of home insurance.

coverage; policy

In a no- _____ system, drivers involved in accidents collect medical expenses, lost wages, and related injury costs from their own insurance companies.

fault

Insurance is a protection against possible _______ loss, and provides protection against many ________.

financial, risks

Insuring one's house against _______ is an example of a peril.

fire

Most homeowner's policies cover many perils, but not:

flood.

Liability insurance usually covers:

friends, guests, and babysitters.

Homeowner's coverage includes:

garage. plants. toolshed. trees.

Defective house wiring is an example of a:

hazard.

Which of the following are covered by a homeowner's policy?

house personal property other structures

Health-enhancing behavior, health insurance, health maintenance organizations, and Medicare are examples of actions and resources to reduce the financial impact of

illness

Examples of risk reduction include:

installing smoke alarms. wearing seat belts in a car.

You should think of the price you pay for home _____ as an investment in protecting your most valuable possession.

insurance

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

liability

Risk management is a _____ -range planning process.

long

Which of the following are covered by renter's insurance?

personal liability additional living expenses personal property

Automobile insurance covers _____ damage and personal damage (bodily injury) caused by the policyholder's car.

physical

Comprehensive insurance for your car covers _____ damage to your car from such risks as fire, theft, falling objects, and hitting an animal.

physical

Choosing not to participate at all in any kind of heavy physical activity is one way to protect yourself from injury. This is an example of:

risk avoidance

Not eating a high fat diet and exercising lower the chances of illnesses. This is an example of:

risk reduction.

Fewer accidents and less vandalism occur in _____ areas than in urban cities.

rural

Setting aside a special fund to make sure that you would cover yourself in the event of a loss is:

self-insurance.

The higher the deductible:

the more risk the insured is assuming

Which of the following are possible limits to the coverage for additional living expenses in a homeowner's insurance policy?

10 to 20 percent of the home's coverage Full cost of temporary living expenses up to a year

In general, young drivers (under _____ ) and those over _____ have more frequent and severe accidents.

25, 70

Which of the following is an example of a detached structure that is covered under homeowner's insurance?

A garage

Which of these strategies help reduce the financial impact of a disability?

Buying a disability insurance policy Savings and making investments Observing safety precautions

Which of the following is not a factor that influences the premium cost for auto insurance?

Color

Beyond the standard bodily injury and property damage coverage, other possible automobile coverage includes:

car rentals. towing services. wage loss.

Expensive replacement parts and _____ repairs due to body style contribute to higher automobile premium rates.

complicated

The main factors that influence premiums for automobile insurance are:

vehicle type, rating territory, and driver classification

Life Insurance is a financial strategy to deal with the financial impact resulting from the loss of one's income due to the death of a spouse.

True

Not buying flood insurance on a house is an example of risk assumption.

True

Risk management is a long-range financial planning process that helps reduce financial losses caused by destructive events.

True

Today most insurance companies recommend that homes be insured for full coverage and not just 80 percent of replacement value. True false question.

True

You can be held legally responsible for another person's injury or damage even if it was not your fault.

True

Choosing never to drive to work, so you are not in an accident is an example of risk _____.

avoidance

One of the financial strategies available due to the death of a spouse is to:

use Social Security survivor's benefits.

The tenants form HO-1 covers personal belongings of renters from the perils of which of the following?

Windstorm Fire Smoke Lightning

The liability insurance of regular employees who come to the house such as a gardener, cook, or housekeeper may be covered by:

workman's compensation.

All of the losses would be covered by homeowner's insurance except:

you accidentally injure yourself with a sharp blade at home.

Not clearing ice from the front steps of your house is an example of _____, which is failure to take ordinary or reasonable care.

negligence

In a ______ system, drivers involved in accidents collect medical expenses, lost wages, and related injury costs from their own insurance companies.

no-fault