Personal Finance Ch8 Quiz

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

$50,000 to $100,000

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

- Personal liability - Additional living expenses - Personal property

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

- Personal property - A house - Other structures

Which of the following are general risk management techniques?

- Risk avoidance - Risk reduction - Risk assumption

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

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

Which of the following are risk assumption actions?

- Self-insuring - Deciding not to purchase collision insurance

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

- Windstorms - Theft - Smoke - Fire and lightning

Examples of risk reduction actions include

- installing smoke alarms - wearing seat belts in a car

True or false: Purchasing insurance is the only way to manage risk

False

True or false: Risk management needs are constant throughout one's life

False

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

It should change along with your needs and goals

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

Self-insurance

True or false: Not buying flood insurance on a house is an example of risk assumption

True

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

a personal property floater

Negligence is failure to take ordinary or reasonable _____ in a situation

care, precaution, responsibility, precautions, actions, or caution

Defective house wiring is an example of a

hazard

Risk management is a(n) _____

long-range planning process

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

no-fault

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

physical

The most common method of dealing with risk is to

risk shift

Towing and emergency road service coverage pays for the cost of getting your vehicle to a

service station, but not for the cost of repairs

Which of the following is true regarding insurance?

Insurance is not the only way of dealing with risk.

True or false: 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 home located in an area where there is a history of high claims will have _____ premiums

high, higher, greater, larger, bigger, or increased

Shifting of _____ is done through the purchase of an insurance

risk

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

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

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

A garage

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

Additional living expenses coverage

True or false: Risk management is a long-range financial planning process that helps reduce financial losses caused by destructive events

True

Wage loss insurance will reimburse you for

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

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

color

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

complicated

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

comprehensive

The type of structure and the type of _____ materials used influence the cost of insurance coverage

construction

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

True or false: Insurance for your home should cover the amount you paid for the home

false

True or false: The main bodily injury coverages are bodily injury liability, mortgage payments coverage, and uninsured motorist's protection

false

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

fault

Most homeowner's policies cover many perils, but not

flood

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

hazard

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

insurance

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

inventory

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

Shifting of risk is done through the purchase of an insurance _____ from an insurance company

policy

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

risk reduction

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

true

True or false: Homeowner's insurance covers damages to your home due to many perils, such as fire and windstorm, and it also covers personal injuries received by persons on your property.

true

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

true

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

you accidently injure yourself with a sharp blade at home

The two main categories of automobile coverage are

- property damage - bodily injury

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.

- replace - paid

Homeowner's insurance coverage includes

- toolshed - plants - garage - trees

Which of the following are risk avoidance actions?

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

True or false: When we set up a special fund to cover the cost of a loss, we are self-insuring

true

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

true

True or false: Your driver classification is one of the main factors that affects the premium for your vehicle insurance

true

The main factors that influence premiums for automobile insurance are

vehicle type, rating territory, and driver classification

The main bodily injury coverages are

- medical payments coverage - bodily injury liability - uninsured motorist's protection

A deductible is a set amount that a policyholder must pay

- per loss on an insurance policy - for assuming risk - for risk shifting

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

avoidance

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

negligence