Finance: Chapter 10 Smartbook

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

Additional living expenses Personal liability Personal property

Wage loss insurance will reimburse you for:

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

Which of the following are general risk management techniques?

Assumption Avoidance Reduction

Choosing never to sky-dive is an example of risk _______.

Avoidance

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

Cash

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 best defines homeowner's insurance?

Coverage for your residence and its financial risks

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

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

Increasing your _______ lowers your premium.

Deductible

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

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

House Other structures Personal property

What are some ways of reducing premiums on automobile insurance?

Installing security devices Comparison shopping for automobile insurance Completing driver training Maintaining a safe driving record

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

Insurance

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

Loss

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

Medical expenses Legal expenses Other costs that arise when someone is injured

The goals of insurance include:

Minimizing personal risks Minimizing liability risks Minimizing property risks

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

Physical

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

Price

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

Smoke Theft Fire and lightning Freezing

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

True

The main bodily injury coverages are:

Uninsured motorist's protection Medical payments coverage Bodily injury liability

The main factors that influence premiums for automobile insurance are:

Vehicle type, rating territory, and driver classification

Which of the following are examples of the risk reduction technique of risk management?

Wearing seat belts Quitting smoking

Examples of the risk reduction technique of risk management include _______.

Wearing seat belts in a car Installing smoke alarms

The four risk management methods (in the same order as presented in the text) include risk _______, risk _______, risk _______, and risk _______.

Avoidance, reduction, assumption, and shifting

People's risk management needs typically remain unchanged throughout their lives.

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

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

False

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

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

Hazard

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

Liability

Which of the following financial losses can you insure against?

Loss of home or belongings Catastrophic illness Personal and property damage when driving

A deductible is a set amount that the policyholder must pay _______ on an insurance policy.

Per loss

Banks require home mortgage borrowers to have _______ insurance.

Property

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

Property

Wearing your seatbelt or installing smoke alarms would belong to the risk ______ technique of risk management.

Reduction

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

A deductible is a combination of which of the following two risk management methods?

Risk assumption Risk shifting

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

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

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

True