Personal Finance Chapter 8

Motor vehicle crashes cost over ______ in lost wages and medical bills every year.

$150 billion

When Stanley was visiting Elaine, he tripped on her front porch step and sprained his ankle. His injuries were covered by

Elaine's medical payments coverage.

Anything that may possibly cause a loss is called a

Peril

What is the fee that a policyholder pays when an insurance company agrees to take on the risk?

Premium

Personal liability coverage does NOT protect

A housekeeper.

All of the following are acceptable types of documentation for a household inventory except

A listing of items and their details in your memory.

An individual who purchases an insurance policy is called

A policyholder

Which of the following is a type of motor vehicle insurance available to drivers?

All of the above may be available to drivers

The most common risks are

All of these are common risks.

Which of the following questions should one ask when developing a risk management plan?

All of these questions should be asked when developing a risk management plan.

Tom wanted to receive as many discounts on his home insurance as possible. Which of the following would NOT provide a discount?

All of these should provide a discount for Tom.

Amber had permission from Bradley to borrow his car to run some errands. Unfortunately, while Amber was driving, she looked down to change songs on her iPod and sideswiped a car and hit a bicyclist. Based on her experience, which of the following would be true?

Amber's insurance policy should cover any property damage claims since she was driving Bradley's car with his permission.

Medical payments coverage applies to medical expenses of

Anyone who is injured in your vehicle, including you.

Homeowner's insurance covers all of the following except

Automobiles, A detached garage, Trees and shrubs, A toolshed, Personal property.

Motor vehicle bodily injury coverage typically includes all of the following except

Bodily injury liability of all expenses, no matter the cost, for the most injured.

Home insurance policies include coverage for all of the following except

Business property.

Henry was driving at dusk and hit a deer running across the road. His damage would be covered under his

Collision coverage.

Albert left his vehicle parked on the street in the front of his house when he went on vacation. While he was gone, his street flooded and his car was severely damaged. This damage would be covered under his

Comprehensive physical damage coverage.

Samantha was driving on the highway during a storm and hail dented her car. This damage would be covered under her

Comprehensive physical damage coverage.

Zachary lived in a neighborhood that was known for gang activity. One day, he noticed that his car had been vandalized. This damage would be covered under his

Comprehensive physical damage coverage.

Homeowner's insurance includes all of the forms listed here except

HO-8.

Barbara left a skateboard on her front steps. Her neighbor tripped on the skateboard and was injured. The skateboard was a

Hazard

Yogi is applying for insurance for his new home. Which of the following is correct?

He should base the amount of insurance on the price to rebuild or repair the new home.

Zach is applying for insurance for his new home. Which of the following is correct?

He should insure the building under the replacement value method to receive the full cost of repairing or replacing it.

Andrew is applying for insurance for his new home. Which of the following is correct?

He should use the replacement value method for settling claims to receive the full cost of repairing or replacing his personal belongings.

Barnaby is applying for insurance for his new home. Which of the following is correct?

His coverage should be increased as construction costs rise.

Vincent is applying for insurance for his new home. Which of the following is correct?

His personal belongings should be covered with his home at 55-75% of his home's insured amount.

The best place to keep a household inventory is

In a safe deposit box.

Cindy was contacted by her home insurance agent to discuss ways to decrease her premium. Which of the following should NOT reduce her premium?

Increasing the amount of coverage.

An insurance company will

Insure pure risk, but not speculative risk.

Which of the following should reduce your auto insurance premium?

Maintain good grades in college

The main goal when setting insurance goals is to

Minimize personal, property, and liability risks.

The failure to take ordinary or reasonable care to prevent accidents from happening is called

Negligence

Barbara left a skateboard on her front steps. Her neighbor tripped on the skateboard and was injured. The fact that Barbara didn't put away the skateboard is called

Negligence.

Which of the following is correct?

One question that should be asked when developing a risk management plan is "What do I need to insure?"

Paul was driving his kids to a piano lesson in a 2005 minivan. While driving, he was hit by an uninsured motorist. Although Paul and his kids had only minor injuries, their vehicle was totaled. Based on this information, which of the following is correct?

Paul's uninsured motorist's protection should cover the cost of injuries for Paul and his kids.

Barbara left a skateboard on her front steps. A windstorm swept the skateboard up and through her window. The windstorm was a

Peril.

Insurance that covers valuable items, such as an expensive musical instrument, is called

Personal property floater.

Personal property insurance covers

Personal property items up to 55-75% of the insured value of the home.

The two basic types of risk that people face regarding potential property losses are

Physical damage and damage caused by criminal behavior.

Madeline had a severe allergy attack and crashed her car into a telephone pole while sneezing. The damage to the telephone pole would be covered under Madeline's

Property damage liability coverage.

Patrick has an old car and wants to keep his insurance costs down, but he wants coverage in case he damages the property of others, including street signs and telephone poles. In order to minimize the financial impact of an accident he may cause, he should, at a minimum, carry which type of insurance?

Property damage liability coverage.

Which of the following is NOT correct about renter's insurance?

Renter's insurance covers the building and other structures on the site.

If you choose to take responsibility for the negative results of a risk, you are using

Risk assumption.

If you choose to avoid the risk of a traffic accident by not driving to work, you are using

Risk avoidance.

If you choose to wear your seatbelt, you are using

Risk reduction.

If you choose to insure your home or your vehicle, you are using

Risk shifting.

An insurance company is a _________ business that agrees to pay for losses that may happen to someone it insures.

Risk-sharing

Which of the following is NOT correct?

The cost and number of claims you have should not affect your premium.

Liability is defined as

The legal responsibility for the financial cost of another person's losses or injuries.

Sandra is contacting several insurance companies to compare coverage for her home. Which of the following should NOT affect her premium?

The location of your employer.

Timothy was driving his friend Nick to football practice. While driving, he was hit by a driver who had coverage of 100/300/50. Tim and Nick each suffered some physical injuries. Based on this information, which of the following is correct?

The policy would provide a maximum of $100,000 for each person who was injured, and no more than $300,000 for total injuries of all parties in the accident.

Homeowner's insurance covers all of the following except

Theft of jewelry valued at $25,000.

A policy that supplements your basic personal liability coverage is called a(n)

Umbrella policy.

Various states are trying to reduce the time and cost of settling vehicle injury cases. One alternative is

Using the no-fault system.

If you have a loss due to a flood,

You must have already purchased special coverage if you live in an area that has frequent floods in order to be covered.

Which of the following is NOT one of the commonly used general risk management techniques?

risk increase