Econ Chapter 8

what are limits of coverage for personal belongings in home owners policy

55%, 70%, and 75% or home coverage

most homeowners policies contain a provision requiring the building be insured for at least ___ of the replacement value

80%

which policy do tenants form?

HO-4

(for home owner's insurance policy) this covers high dollar items and requires detailed description of items covered and you need to have the item appraised to verify current value

a personal property floater

____ coverage pays for expenses while your home is being repaired

additional living expense

these are risk management techniques

assumption, reduction, and avoidance

expensive replacement parts and complicated repairs due to body style contribute to higher ___

automobile premium rates

____ car insurance covers physical damage to car from fire, theft, falling objects, and animals

comprehensive

what is included in home owner's insurance coverage?

credit card fraud, cost of removing damaged property, temp repairs to prevent further damage, and fire department charges

what is the payment you receive in the "actual cash value method" based on?

current replacement cost of a damaged or lost item minus depreciation

which strategies help reduce the financial impact of disability?

drawing on savings and investments during disability, collecting disability, collecting social security

a ___ is an addition to coverage for a home owner's policy ex: earthquake insurance

endorsement

negligence is..

failure to exercise a normal amount of care. liability risk can be caused by negligence

homeowner's insurance covers:

financial risk of the home (personal property damage and damages due to injuries to others

what is the purpose of a financial responsibility law?

forces drivers to show their ability to cover costs of damage or injury from automobile accidents

what do you receive with the "replacement value method of insurance"

full cost of repairing or replacing damaged or lost item

__increases the likelihood of a loss through a peril

hazards

this 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 financial loss or injury

liability

___ include possible losses due to negligence resulting in bodily injury or property damage to others

liability risks

what mostly affects the cost of mobile home insurance?

location and method used to attach home to the ground

what influences the premium paid on home/property insurance?

location, structure and policy type

what are the goals in insurance?

minimizing personal, property, and liability risks

where does most of the money for car insurance go to in claims?

misc costs when someone is injured, legal expenses, and medical expenses

in which system do drivers involved in accidents collect money from their own insurance companies?

no-fault

these are risk assumption actions:

not buying collision insurance and self-insuring

this varies by state

penalties for driving

___ are uncertainties surrounding loss of income or life due to: unemployment, old age, illness, disability, and deth

personal risks

____ are uncertainties surrounding loss of income or life due to premature death, illness, disability, old age, or unemployment

personal risks

an insurance policy required the payment of an annual___ as part of a contract to cover the risk

premium

personal, property, and liability risk are called ___ since there would be a chance of loss only if the specified events occured

pure risk

when only the insurance company will have to pay for loss if a specific event occurs that is accidental or unintentional

pure risk

this replaces the total value of replacement cost

replacement cost insurance

the amount you can collect with collision insurance is limited to the ____ of the car at the time of the accident

retail value

what are the four risk management methods?

risk avoidance, risk reduction, rrisk assumption, and risk shifting

what are the risks of loss of property that owners face?

robbery, burglary, vandalism, and arson

how do you get the best value when purchasing insurance?

selecting appropriate coverage amount and being aware of factors that affect insurance costs and rates

is a risk management strategy that requires the establishment of a monetary fund to cover the cost of loss

self insurance

what is covered in HO-3 policies?

smoke, fire/lightning, theft, and freezing

which property is covered under "porperty damage liability insurance"?

street signs, buildings, vehicles, and lamp posts

the higher the deductible...

the more risk the insured is assuming

T OR F?? personal belongings of students in college housing are covered by home insurance

true

which policy supplements basic liability coverage and provides protection for injury claims?

umbrella policy

speculative risk is

when a risk included a chance of either loss or gain

which age groups have more frequent and more severe accidents

young drivers under 25 and older drives over 70