Personal Finance Exam #4

tom wanted to receive as many discounts on his home insurance as possible. which of the following would not provide a discount

ALL FOUR

when Stan was visiting Elaine, he tripped on her front porch step and sprained his ankle. his injuries were covered by what?

Elaine's medical payments

an individual who purchases an insurance policy is called what?

a policy holder

medical payments coverage applies to medical expenses of

anyone who is injured in your vehicle, including you

homeowners insurance covers all of the following except -

automobiles

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

comprehensive coverage

sam was driving on the highway during a storm and hail dented her car. this damage would be covered under her what?

comprehensive physical damage

Angela should decrease her deductible from $1000 down to $250 in order to reduce her home insurance premium

false

Caroline was found liable in an accident, this is usually not due to negligence on her part

false

a household inventory should be stored in home office

false

a landlord is responsible for paying renter's insurance

false

it is illegal to use a credit score to determine the premium to charge an individual

false

once a risk management plan is put into action it should remain the same even as family needs change

false

risk avoidance is an organized plan for protecting yourself, your plan, your family, and your property

false

sam should be insured in order to eliminate his risk of losses

false

sam's house should be insured for the amount he originally paid for

false

which of the following should reduce your auto insurance premium

good grades

barbara left a skateboard on her front steps, her neighbor tripped on the skateboard and was injured. the skateboard was a ______

hazard

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 our replacing his personal belongings

the failure to take ordinary or reasonable care to prevent accidents from happening is called what?

negligence

anything that may possible cause a loss is called what?

peril

insurance that covers valuable items such as an expensive piece of instrument is called what?

personal property floater

the most common risks are what?

personal, property, liability

Madeleine 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 Madeleine's what?

property damage liability coverage

Patrick has an old car and wants to keep his insurance cost 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 add a minimum of which carry insurance?

property damage liability coverage

which of the following is not correct about renters insurance?

renters insurance covers the building and other structures onsite

if you choose to avoid the risk of a traffic accident by not driving to work, what are you doing?

risk avoidance

if you choose to wear a seatbelt you are using what kind of risk?

risk reduction

an insurance company is a ________ business that agrees to pay for losses that may happen to someone it insures

risk sharing

if you choose to insure your home or vehicle you are using what kind of risk?

risk shifting

a liability is defined as what?

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

Insurance is protection against financial loss

true

a homeowner's insurance policy provides coverage for additional living expenses so that you can stay somewhere else if a fire damages your home

true

an example of peril is robbery

true

consumer organization such as consumer reports rate insurance companies on a regular basis

true

deductible are a combination of risk assumption and risk shifting where the insured person pays the first part of the claim and the rest of the claim is shifted to the insurance company

true

defective house wiring is a hazard that increases the chance that a fire will start

true

every state in the United States has a law requiring people to carry motor vehicle insurance

true

homeowners insurance includes coverage for detached structures on your property such as a garage or tool shed

true

if you are borrowing money to buy a home, the lender will require that homeowners purchase home insurance

true

if you live in a large city you should expect to pay a higher premium for your auto insurance than someone who lives in a rural area

true

motor vehicle insurance falls into two categories, protection for bodily injury and protection for property damage

true

one of the four questions that should be asked when developing a risk management plan is what do I need to insure?

true

renters insurance is relatively inexpensive while mobile home instance is quite expensive

true

risk management is an organized plan for protecting yourself, your family, and your property

true

robby fell on some ice on Peter's front steps and broke his arm. this is an example of a risk covered by the personal liability portion of Peter's homeowner policy

true

the first step in developing a personal insurance program is to set insurance goals

true

a policy that supplements your basic personal liability coverage is what?

umbrella

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