chapter 11 (auto and homeowner's insurance)

most high-risk driver

19 year old male

not a service company that would rate the financial condition of insurance companies?

Kelly's Blue Book

which of the following people would have the lowest insurance

a person living in a small town compared to a large one

one method of managing risk

accept risk by seeking to limit your exposure to a financial loss.

auto insurance rates are based upon all

age driving record gender -the number of miles and the type of driving you do each year

insurance can protect your existing net worth and also

also increase the likelihood that you will be able to increase your net worth in the future.

automobile insurance rates have risen recently in part due to fraud. some common forms of fraud include faking

an accident or injury

if you have a car accident in which another person in the other car is injured, the type of insurance that would protect you from financial loss is

auto insurance

vehicle insurance to cover various injuries, your property, and the property of others

auto insurance

insurance agents who work for one particular company are called

captive agents

all of the following actions are suggestions to reduce your homeowner's insurance except

change insurance companies whenever you renew your policy

comprehensive coverage would cover financial losses due to

damage to your car caused by wind or hail

which of the following is not covered by renter's insurance

fire damage to the buildings roof

considered personal property

furniture

all of the following may qualify for an auto discount

high grades, driver's training program, several cars insured with the same company

not a suggested risk management method

ignoring risks

of the following statements, which is not true regarding no-fault insurance

it helps determine which driver is at fault and which has no fault

which of the following is not true regarding medical payments coverage?

it is not recommended or needed if you have health insurance.

all of the following statements about uninsured motorist coverage are true except

it replaces bodily injury liability when you are at fault

which of the following is not a characteristic of an umbrella policy

it replaces other policies

the 100 in 100/300/50 refers to the

limit for bodily injury claims that can be paid to one person

underwriters for an insurance company do not

market insurance policies

pays for injuries to you or people in your car in an accident where you (the driver) are at fault

medical payments

which of the following would pay for medical care for people who were injured in your automobile as a result of an accident that was your fault?

medical payments

some states have implemented _______ insurance programs which do not hold a specific driver liable for causing an accident

no-fault

which of the following is not true about the state financial liability laws?

they are the same for all states

the liability component of your homeowner's policy will cover all of the following situations except one. which situation will not be covered?

your neighbor who thinks you have promised to trim a tree in his yard sues you for not doing it

additional coverage on your automobile insurance policy can be purchased for

-the cost of a rental var while your car is being prepared -the cost of towing, even if the problems are not the result of an accident

which of the following may be a reason why an insurance company decides not to renew your policy?

-you caused an accident as a result of drunk driving -your drivers license was suspended

which risk management alternative is feasible when the likelihood of an event that could cause a financial loss is very low and the potential financial loss due to the event is small?

accept risk

auto insurance can be very expensive if you

are a male under 25

most popular forms of insurance

are property and casualty, life insurance, and health insurance

the coverage that is designed to protect you if you cause an accident where the driver or passenger of the other car sustains injuries and sues you is called _______

bodily injury liability

covers damage to your car when you are at fault in an accident

collision coverage

covers damage to your car as a result of theft, fire, vandalism, or other non-accident events

comprehensive

which of the following is covered by renter's insurance

damage to a stove that the landlord purchased before you move in

amount of damage that you will be required to cover if your car is involved in an accident that is your fault is your

deductible

amount of risk you assume through first payment

deductible

the ______ is the amount that you will need to pay if your car is damaged in an accident that was your fault

deductible

one of the problems with no-fault automobile insurance is that it

doesn't penalize drivers who cause accidents to the degree that they should be

people are more willing to purchase or increase their insurance coverage when

economic conditions are favorable and incomes are higher

requires individuals who drive cars to purchase a minimum amount of liability insurance

financial responsibility laws

which of the following statements is not true concerning comprehensive and collision insurance?

financially, it is advisable to take out the lowest deductible possible

not popular form of insurance for individuals

general liability insurance

the best way to reduce your homeowner's insurance premiums is to

increase deductibles

the bodily injury liability coverage of your automobile policy will not pay for

injuries to others in your car due to an accident for which you were at fault

in general, the most expensive part of your automobile policy is ______ coverage

liability

most home insurance policies provide coverage for

liability

primary function of insurance

maintain existing level of wealth

an umbrella policy is designed to cover

major personal liability suits

a deductible is an amount

not paid by the insurance company

the additional living expenses component of a homeowner's policy is designed to

pay for temporary housing while your home is repaired from covered damage

the factor that will not reduce your insurance rate is

paying all speeding tickets promptly

to cover additional personal property not adequately covered by your homeowner's policy, you should take out a(n) ________ policy

personal articles floater

insurance protects you against

potential financial losses or liability that result from unexpected events

the 25 in 50/100/25 refers to _____ coverage

property damage liability

having adequate amounts of auto and homeowner's insurance affects your financial plan by

protecting your net worth and making it larger in the future

to significantly reduce your automobile insurance premiums and still have adequate coverage, you should

raise the deductibles on comprehensive and collision

in general, insurance companies generate their revenues from

receiving payments for policies, investing the proceeds of premiums until the funds are needed to cover losses

lessening your exposure to an illness by getting periodic health checkups is an example of

reducing risks

if you have a poor driving record, , you may be forced to do all of the following except

refrain from filing a claim until your driving record has improved

independent insurance agents

represent many different insurance companies

which of the following statements regarding auto insurance is not true

ten percent of every dollar of auto insurance premiums is used to cover lawsuit costs

in the context of insurance, the term liability is used to mean

that you may be required to pay someone for damages that you caused.

insurance is not a good option for managing risk when

the probability of loss is very small

not covered in a standard homeowner's policy

the river you live near overflows its bank and washes your house away

since insurance companies rely mostly on their premiums to cover claims

they price their insurance policies to reflect the probability of a claim and the size of the claim.

decision to obtain insurance should be determined by

weighing its costs and benefits.

the comprehensive or collision premium of a Rolls-Royce in relationship to a Chevy

will be higher because a Rolls-Royce costs more than a Chevy.

if you have an accident resulting in $2,000 damage to your car and have $500 deductible collision coverage, which of the following statements is true?

you will pay the first $500 and your insurance company will pay $1,500.

events that are typically not covered by your homeowner's insurance include all of the following except

explosion of frozen pipes

homeowners insurance premiums are heavily influenced by all of the following except

number of children who live in the home