Finance - Chapter 10 Questions

Which of the following risks are covered by homeowner's insurance?

- coverage for the financial risks associated with injuries to others. - coverage for your place of residence. - coverage for the financial risks of damage to personal property.

Which of the following risks are covered by homeowner's insurance?

- coverage for your place of residence - coverage for the financial risks of damage to personal property - coverage for the financial risks associated with injuries to others

Most of the money automobile insurance companies pay in claims goes for:

- legal expenses - medical expenses - other costs that arise when someone is injured

The main types of risks related to a home and an automobile are:

- your responsibility for injuries to others - damage or loss to your property - your responsibility for damage to the property of others

Which of the following best defines homeowner's insurance?

Coverage for your residence and its financial risks.

True or False: Increasing your deductibles will increase your premiums for your homeowner's policy.

False

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

False

True or False: The amount you can recover with collision insurance is limited to the purchase price of your vehicle.

False

True or False: The main types of risks related to a home and an automobile are property damage and loss of income due to premature death.

False

The protection against possible loss that gives you peace of mind is called ______

Insurance

True or False: Comparison shopping can usually help to lower the premiums on your homeowner's insurance policy.

True

True or False: Completing driver training and maintaining a safe driving record will help reduce your automobile insurance premiums.

True

True or False: Lending institutions require home mortgage borrowers to have home insurance.

True

True or False: Physical damage to a property is caused by hazards such as fire, wind, water, and smoke.

True

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

True

Increasing your _________ lowers your premium.

deductible

Defective house wiring is an example of a(n) _____ that increases the chances of fire.

hazard

Banks require home mortgage borrowers to have ________ insurance.

homeowner's

_______ is the legal responsibility for the financial loss due to injuries to others or damage to property for which you are responsible.

liability

The goals of insurance include minimizing personal, _______, and liability risks.

property

The main factors that influence premiums for automobile insurance are:

vehicle type, rating territory, and driver classification

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

- additional living expenses - personal liability - personal property

The four risk management methods include: risk _______, risk ______, risk ______, and risk ______.

- avoidance - reduction - assumption - shifting

Which of the following are general risk management techniques?

- avoidance - reduction - assumption

Which of the following financial losses can you insure against?

- loss of home or belongings - catastrophic illness - personal and property damage when driving

What are some ways of reducing premiums on automobile insurance?

- maintaining a safe driving record - completing driver training - comparison shopping for automobile insurance - installing security devices

The goals of insurance include:

- minimizing liability risks - minimizing personal risks - minimizing property risks

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

- personal property - house - other structures

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

- smoke - theft - fire and lightning - freezing

The main bodily injury coverages are:

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

True or False: Your homeowner's insurance covers damage to your home, other structures on your property, and your automobile.

False

Wage loss insurance will reimburse you for:

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

Hazards increase the likelihood of a(n) ______ through a peril.

loss

Liability is the legal responsibility for the financial cost of another person's financial _______.

loss

You shouldn't select a company based on ______ alone.

price

The purpose of a financial responsibility law is to force drivers to __________.

show their ability to cover the costs of damage or injury from automobile accidents.

A _______ is state legislation that requires drivers to prove their ability to cover the cost of damage or injury caused by an automobile accident.

Financial responsibility law

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

Flood

The amount you can collect with collision insurance is limited to the actual _______ value of the automobile at the time of the accident.

cash

_____ damage to a property is caused by events such as fire, wind, water, and smoke.

physical

Insurance similar to homeowner's that is available for tenants is ______.

renter's insurance

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

replace

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