Personal finance canadian 7th edition kapoor test bank

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Chapter 08 - Home and Automobile Insurance

Chapter 08 Home and Automobile Insurance

True / False Questions 1. Personal risks, property risks, and liability risks are types of speculative risks.

FALSE

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-01 Develop a risk management plan using insurance.

Topic: 08-01 Insurance and Risk Management: An Introduction

2. Risk management is not an organized strategy for protecting and conserving assets and people.

FALSE

Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 08-01 Develop a risk management plan using insurance.

Topic: 08-01 Insurance and Risk Management: An Introduction

3. The most common method of dealing with risk is to shift, or transfer it to an insurance company or some other organization.

TRUE

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-01 Develop a risk management plan using insurance.

Topic: 08-01 Insurance and Risk Management: An Introduction

8-1

Chapter 08 - Home and Automobile Insurance

4. A rider is an addition of coverage to a standard insurance policy.

TRUE

Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 08-02 Discuss the importance of property and liability insurance.

Topic: 08-06 Property and Liability Insurance

5. Property losses can be categorized into destruction of property, and losses due to robbery, burglary, vandalism, or arson.

TRUE

Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 08-02 Discuss the importance of property and liability insurance.

Topic: 08-06 Property and Liability Insurance

6. Vicarious liability refers to the failure to take ordinary or reasonable care in a situation.

FALSE

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-02 Discuss the importance of property and liability insurance.

Topic: 08-06 Property and Liability Insurance

7. The homeowners' pets are included in the coverage provided by the homeowners insurance.

FALSE

Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 08-03 Explain the insurance coverages and policy types available to homeowners and renters.

Topic: 08-09 Principles of Home and Property Insurance

8-2

Chapter 08 - Home and Automobile Insurance

8. Personal property refers to building and other structures covered by homeowner's insurance.

FALSE

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-03 Explain the insurance coverages and policy types available to homeowners and renters.

Topic: 08-09 Principles of Home and Property Insurance

9. Personal belongings of a high value can be protected with a personal articles endorsement.

TRUE

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-03 Explain the insurance coverages and policy types available to homeowners and renters.

Topic: 08-09 Principles of Home and Property Insurance

10. There are no significant differences in home owner rates when comparing different insurance companies FALSE

Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 08-04 Analyze factors that influence the amount of coverage and cost of home insurance.

Topic: 08-14 Home Insurance Cost Factors

11. Increased liability insurance is available with an umbrella policy.

TRUE

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-03 Explain the insurance coverages and policy types available to homeowners and renters.

Topic: 08-09 Principles of Home and Property Insurance

8-3

Chapter 08 - Home and Automobile Insurance

12. Voluntary medical payments coverage in a home insurance policy is designed to pay for legal action taken against a homeowner who may be legally responsible for injury or property damage of others.

FALSE

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-03 Explain the insurance coverages and policy types available to homeowners and renters.

Topic: 08-09 Principles of Home and Property Insurance

13. Replacement cost for settling property insurance claims is more costly than the actual cash value method.

TRUE

Accessibility: Keyboard Navigation Difficulty: Hard Learning Objective: 08-04 Analyze factors that influence the amount of coverage and cost of home insurance.

Topic: 08-14 Home Insurance Cost Factors

14. A home made of wood is more expensive to insure than a comparable brick structure.

TRUE

Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 08-04 Analyze factors that influence the amount of coverage and cost of home insurance.

Topic: 08-14 Home Insurance Cost Factors

15. The higher the deductible you choose for your car insurance, the higher the premium.

FALSE

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-05 Identify the important types of automobile insurance coverages.

Topic: 08-19 Automobile Insurance Coverages

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Chapter 08 - Home and Automobile Insurance

16. Accident benefits automobile insurance coverage pays for the costs of injuries to persons in the driver's vehicle.

TRUE

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-05 Identify the important types of automobile insurance coverages.

Topic: 08-19 Automobile Insurance Coverages

17. No-fault insurance systems have consistently reduced the time and costs involved in settling claims.

FALSE

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-05 Identify the important types of automobile insurance coverages.

Topic: 08-19 Automobile Insurance Coverages

18. Collision coverage pays for damage to your vehicle for such hazards as fire, theft, or wind damage.

FALSE

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-05 Identify the important types of automobile insurance coverages.

Topic: 08-19 Automobile Insurance Coverages

19. The driver classification category is based on automobile style, model, and value of the vehicle.

FALSE

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-06 Evaluate factors that affect the cost of automobile insurance.

Topic: 08-22 Automobile Insurance Costs

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Chapter 08 - Home and Automobile Insurance

20. The purpose of a high-risk pool is to assist people with poor driving records in obtaining automobile insurance coverage.

TRUE

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-06 Evaluate factors that affect the cost of automobile insurance.

Topic: 08-22 Automobile Insurance Costs

21. A speculative risk is a risk that carries a chance of either loss or gain.

TRUE

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-01 Develop a risk management plan using insurance.

Topic: 08-01 Insurance and Risk Management: An Introduction

22. Starting a small business that may or may not succeed is an example of speculative risk.

TRUE

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-01 Develop a risk management plan using insurance.

Topic: 08-01 Insurance and Risk Management: An Introduction

23. It is difficult to compare auto insurance among provinces because of the differences in cost structures and benefit levels between tort-based and no-fault systems.

TRUE

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-05 Identify the important types of automobile insurance coverages.

Topic: 08-19 Automobile Insurance Coverages

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Chapter 08 - Home and Automobile Insurance

24. Driver classification is a category based on the driver's age, gender, marital status, driving record, and driving habits TRUE

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-05 Identify the important types of automobile insurance coverages.

Topic: 08-19 Automobile Insurance Coverages

25. Risk management is an organized strategy for protecting assets and people.

TRUE

Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 08-01 Develop a risk management plan using insurance.

Topic: 08-01 Insurance and Risk Management: An Introduction

26. Vicarious liability occurs when one person is held responsible for the actions of another person.

TRUE

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-02 Discuss the importance of property and liability insurance.

Topic: 08-06 Property and Liability Insurance

27. Personal property refers to the contents of your home—clothes, furniture, appliances, and similar items covered by homeowner's insurance.

TRUE

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-03 Explain the insurance coverages and policy types available to homeowners and renters.

Topic: 08-09 Principles of Home and Property Insurance

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Chapter 08 - Home and Automobile Insurance

28. Personal articles endorsement is an additional property insurance to cover the damage or loss of a specific item of high value.

TRUE

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-03 Explain the insurance coverages and policy types available to homeowners and renters.

Topic: 08-09 Principles of Home and Property Insurance

Multiple Choice Questions 29. Peril is defined as A. the refusal by an insurance company to pay for the covered loss.

B. the cause of risk.

C. the cause of a possible loss.

D. an uncertainty as to loss.

E. risk

Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 08-01 Develop a risk management plan using insurance.

Topic: 08-01 Insurance and Risk Management: An Introduction

30. Defective house wiring is an example of a A. hazard.

B. peril.

C. risk.

D. speculation.

E. negligence.

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-01 Develop a risk management plan using insurance.

Topic: 08-01 Insurance and Risk Management: An Introduction

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Chapter 08 - Home and Automobile Insurance

31. The uncertainties of direct and indirect losses due to fire, wind, accident, theft, etc., are called ____________ risks.

A. personal B. business C. property D. liability E. speculative

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-01 Develop a risk management plan using insurance.

Topic: 08-01 Insurance and Risk Management: An Introduction

32. Purchasing a technology stock that may or may not increase in price is an example of ___________ risk.

A. speculative B. pure C. commercial D. personal E. liability

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-01 Develop a risk management plan using insurance.

Topic: 08-01 Insurance and Risk Management: An Introduction

33. Which of the following would be covered by a home insurance policy?

A. earthquake damage B. flooding C. brush fires D. wind damage to your roof E. theft of business supplies from your office

Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 08-03 Explain the insurance coverages and policy types available to homeowners and renters.

Topic: 08-09 Principles of Home and Property Insurance

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Chapter 08 - Home and Automobile Insurance

34. The legal responsibility for the financial cost of another person's losses or injuries is referred to as A. theft.

B. robbery.

C. liability.

D. assigned risk.

E. collusion.

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-02 Discuss the importance of property and liability insurance.

Topic: 08-06 Property and Liability Insurance

35. If a homeowner leaves toys on stairs that result in injury to a delivery person, this may be ruled as A. vicarious liability.

B. negligence.

C. assigned risk.

D. umbrella coverage.

E. coinsurance.

Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 08-02 Discuss the importance of property and liability insurance.

Topic: 08-06 Property and Liability Insurance

36. Vicarious liability refers to A. failure to take ordinary and reasonable care.

B. when a person is held responsible for actions of another person.

C. property damage.

D. high risk insurance coverage.

E. common hazards in our society.

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-02 Discuss the importance of property and liability insurance.

Topic: 08-06 Property and Liability Insurance

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Chapter 08 - Home and Automobile Insurance

37. While cleaning your home, a worker damages some furniture. You take action against the worker's employer to cover the cost of the damage. This is an example of a(n) ____________ liability.

A. umbrella B. assigned C. common situation D. peril E. vicarious

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-03 Explain the insurance coverages and policy types available to homeowners and renters.

Topic: 08-09 Principles of Home and Property Insurance

38. High winds cause damage to trees, shrubs, and other plants. This insurance claim would be covered under the ____________ component of homeowner's insurance.

A. additional living expenses B. personal property C. building and other structures D. personal liability E. property damage

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-03 Explain the insurance coverages and policy types available to homeowners and renters.

Topic: 08-09 Principles of Home and Property Insurance

39. The additional living expenses component of a home insurance policy is designed to A. pay for temporary housing while your home is repaired.

B. cover damage to property while away from home.

C. reimburse a homeowner for damage done by a visitor.

D. pay for medical expenses of people injured on your property.

E. pay for repairs caused by fire or other hazards.

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-03 Explain the insurance coverages and policy types available to homeowners and renters.

Topic: 08-09 Principles of Home and Property Insurance

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Chapter 08 - Home and Automobile Insurance

40. Which of the following is considered personal property for home insurance coverage?

A. an automobile B. a garage C. a house D. appliances E. trees and shrubs

Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 08-03 Explain the insurance coverages and policy types available to homeowners and renters.

Topic: 08-09 Principles of Home and Property Insurance

41. Georgette Valentine has expensive photography equipment for use in her hobby. Which coverage from the following list would pay for damage or theft of this equipment?

A. an umbrella policy B. a household inventory C. additional living expense coverage D. a personal articles endorsement E. a coinsurance floater

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-03 Explain the insurance coverages and policy types available to homeowners and renters.

Topic: 08-09 Principles of Home and Property Insurance

42. The purpose of a household inventory is to A. reduce insurance costs.

B. lower the chance of negligence C. obtain personal property floater coverage.

D. increase liability coverage.

E. verify owned property.

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-03 Explain the insurance coverages and policy types available to homeowners and renters.

Topic: 08-09 Principles of Home and Property Insurance

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Chapter 08 - Home and Automobile Insurance

43. The ____________ coverage of a home insurance policy would cover accidental damage to another person's property by a member of your family.

A. voluntary property damages B. personal property C. medical payments D. additional living expenses E. personal liability

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-03 Explain the insurance coverages and policy types available to homeowners and renters.

Topic: 08-09 Principles of Home and Property Insurance

44. An umbrella policy is designed to cover A. expensive personal property.

B. additional buildings on your property.

C. property when traveling away from home.

D. flood damage E. major personal liability suits.

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-03 Explain the insurance coverages and policy types available to homeowners and renters.

Topic: 08-09 Principles of Home and Property Insurance

45. Most home insurance policies provide coverage for A. earthquake damage.

B. flood damage.

C. an umbrella liability.

D. basic personal liability.

E. medical payments.

Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 08-03 Explain the insurance coverages and policy types available to homeowners and renters.

Topic: 08-09 Principles of Home and Property Insurance

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Chapter 08 - Home and Automobile Insurance

46. Tenant's insurance would include coverage for all of the following except A. additional living expense coverage.

B. personal liability.

C. building and other structures.

D. personal property.

E. protection against financial loss due to damage.

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-03 Explain the insurance coverages and policy types available to homeowners and renters.

Topic: 08-09 Principles of Home and Property Insurance

47. Which of the following are not covered by tenant's insurance?

A. medical expenses for injuries to visitors B. fire damage of the building's roof C. additional living expenses D. accidental damage to the property of others E. cost of legal action due to personal liability

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-03 Explain the insurance coverages and policy types available to homeowners and renters.

Topic: 08-09 Principles of Home and Property Insurance

48. Your home insurance provides for replacement value for personal property losses. A microwave is stolen. It cost $300 two years ago and has an expected life of six years. A comparable microwave costs $200 today. What amount will the insurance company pay?

A. $100 B. $150 C. $200 D. $350 E. $300

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-04 Analyze factors that influence the amount of coverage and cost of home insurance.

Topic: 08-14 Home Insurance Cost Factors

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Chapter 08 - Home and Automobile Insurance

49. Which of the following insurance policy provisions requires that the insured must pay for part of the loss of a claim if the property is not insured for the specified percentage of replacement value?

A. personal property floater B. an endorsement C. assigned risk clause D. umbrella coverage E. coinsurance clause

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-04 Analyze factors that influence the amount of coverage and cost of home insurance.

Topic: 08-14 Home Insurance Cost Factors

50. The ____________ method to settle claims is based on the current replacement cost of a damaged or lost item less depreciation.

A. replacement value B. actual cash value C. umbrella D. endorsement E. personal articles endorsement

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-04 Analyze factors that influence the amount of coverage and cost of home insurance.

Topic: 08-14 Home Insurance Cost Factors

51. Home insurance costs are affected most directly by A. the number of claims in an area.

B. insurance agents' commission.

C. government regulations that set premiums.

D. processing costs of claims.

E. the profits of the insurance company.

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-04 Analyze factors that influence the amount of coverage and cost of home insurance.

Topic: 08-14 Home Insurance Cost Factors

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Chapter 08 - Home and Automobile Insurance

52. The purpose of minimum insurance legislation is to A. risk of injury or death.

B. possibility of damage, destruction or theft.

C. third party liability.

D. A and B are correct.

E. A, B and C are correct.

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-05 Identify the important types of automobile insurance coverages.

Topic: 08-19 Automobile Insurance Coverages

53. ____________ provides coverage for the risk of financial loss due to legal expenses, medical expenses, lost wages, and other expenses associated with injuries caused by an automobile accident for which you were responsible.

A. Medical payments B. No-fault insurance C. Uninsured motorist's protection D. Bodily injury liability E. Comprehensive insurance

Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 08-05 Identify the important types of automobile insurance coverages.

Topic: 08-19 Automobile Insurance Coverages

54. Ahmed Hadad was injured in an accident caused by another driver who did not have insurance. Ahmed's medical expenses would be covered by A. medical payments.

B. collision.

C. bodily injury liability.

D. uninsured motorist's protection.

E. no-fault coverage.

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-05 Identify the important types of automobile insurance coverages.

Topic: 08-19 Automobile Insurance Coverages

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Chapter 08 - Home and Automobile Insurance

55. Which of the following coverage's would pay for medical care for people who were injured in your automobile?

A. comprehensive B. bodily injury liability C. collision D. accident benefits E. no-fault insurance

Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 08-05 Identify the important types of automobile insurance coverages.

Topic: 08-19 Automobile Insurance Coverages

56. Which of the following is a system in which drivers involved in an accident collect medical expenses, lost wages, and related injury costs from their own insurance company?

A. assigned risk pool B. no-fault insurance C. comprehensive system D. financial responsibility coverage E. uninsured motorist's protection

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-05 Identify the important types of automobile insurance coverages.

Topic: 08-19 Automobile Insurance Coverages

57. Comprehensive coverage would cover financial losses due to A. injuries caused by a driver without insurance.

B. damage to your car in an accident for which you were at fault.

C. damage to your car caused by wind or hail.

D. legal action against you for an accident.

E. damage to a neighbor's tree with your car.

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-05 Identify the important types of automobile insurance coverages.

Topic: 08-19 Automobile Insurance Coverages

8-17

Chapter 08 - Home and Automobile Insurance

58. Your geographic location is a major factor in determining the ____________ used to calculate your automobile insurance premiums.

A. driver classification B. assigned risk pool C. coverage level D. legal responsibilities E. rating territory

Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 08-06 Evaluate factors that affect the cost of automobile insurance.

Topic: 08-24 Automobile Insurance Premium Factors

59. Wind damage occurs to your car costing $1,000 to repair. If you have a $300 deductible for collision and full coverage for comprehensive, what portion of the claim will the insurance company pay?

A. $300 B. $1,300 C. $500 D. $700 E. $800

Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 08-05 Identify the important types of automobile insurance coverages.

Topic: 08-19 Automobile Insurance Coverages

60. Which of the following refers to a category based on age, sex, marital status, and driving habits that is used to set automobile insurance premiums?

A. rating territory B. assigned risk pool C. no-fault system D. driver classification E. use of the vehicle

Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 08-06 Evaluate factors that affect the cost of automobile insurance.

Topic: 08-22 Automobile Insurance Costs

8-18

Chapter 08 - Home and Automobile Insurance

61. Which of the following factors is used to determine a person's driver classification?

A. Age B. Type and age of vehicle C. Claims in your geographic area D. Insurance company claim processing costs E. State insurance premium regulations

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-06 Evaluate factors that affect the cost of automobile insurance.

Topic: 08-22 Automobile Insurance Costs

62. The purpose of a high-risk pool is to A. provide insurance for poor drivers.

B. reduce medical costs associated with auto accidents.

C. take unsafe drivers off the road.

D. reduce auto insurance premiums with state regulation.

E. offer premium discounts to safe drivers.

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-06 Evaluate factors that affect the cost of automobile insurance.

Topic: 08-22 Automobile Insurance Costs

63. A system that allows insurance companies to provide coverage to several individuals with poor driving records is referred to as A. no-fault insurance.

B. an assigned risk pool.

C. premium discounts.

D. comprehensive coverage.

E. collision coverage.

Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 08-06 Evaluate factors that affect the cost of automobile insurance.

Topic: 08-22 Automobile Insurance Costs

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Chapter 08 - Home and Automobile Insurance

64. Identify the areas covered by tenants' insurance.

I Personal property protection.

II Additional living expenses.

III Personal liability.

IV Replacement value of premises.

A. I, II and III only B. I and III only C. II, III and IV only D. I, II, III and IV E. I, II, and IV

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-03 Explain the insurance coverages and policy types available to homeowners and renters.

Topic: 08-09 Principles of Home and Property Insurance

65. Which of the following home insurance policies will have the highest premium?

Policy Form Standard Broad Comprehensive

Building Named perils All risk All risk

Contents Named perils Named perils All risk

A. Standard B. Broad C. Comprehensive D. All forms will have the same cost.

E. Broad and Comprehensive are equally expensive

Accessibility: Keyboard Navigation Difficulty: Hard Learning Objective: 08-03 Explain the insurance coverages and policy types available to homeowners and renters.

Topic: 08-09 Principles of Home and Property Insurance

8-20

Chapter 08 - Home and Automobile Insurance

66. In the insurance industry, the term "peril" represents ________________.

A. the chance that something may be lost B. the cause of the possible loss C. a habit that increases the likelihood of loss D. the actual loss experienced E. your record of past losses

Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 08-01 Develop a risk management plan using insurance.

Topic: 08-01 Insurance and Risk Management: An Introduction

67. The requirement for a minimum level of home insurance coverage refers to which of the following?

A. Deductible B. Specified perils C. Endorsement D. Co-insurance E. Basic

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-04 Analyze factors that influence the amount of coverage and cost of home insurance.

Topic: 08-14 Home Insurance Cost Factors

68. Which of the following is likely to increase your car insurance premium?

I. You live in a rural area.

II. You are over 70.

III. You usually carry several passengers.

A. I and II, only B. II and III, only C. I and III, only D. I, II and III E. I only

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-06 Evaluate factors that affect the cost of automobile insurance.

Topic: 08-22 Automobile Insurance Costs

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Chapter 08 - Home and Automobile Insurance

69. Risk is A. the chance that something may be lost.

B. is the cause of a possible loss.

C. the increased likelihood of loss through some peril.

D. uncertainties of direct or indirect losses to property due to fire, windstorms, accidents, theft, and other hazards.

E. loss possibilities due to negligence resulting in bodily harm or property damage to others.

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-01 Develop a risk management plan using insurance.

Topic: 08-01 Insurance and Risk Management: An Introduction

70. Peril A. is the chance that something may be lost.

B. is the cause of a possible loss.

C. increases the likelihood of loss through some peril.

D. is the uncertainty of direct or indirect losses to property due to fire, windstorms, accidents, theft, and other hazards.

E. is loss possibilities due to negligence resulting in bodily harm or property damage to others.

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-01 Develop a risk management plan using insurance.

Topic: 08-01 Insurance and Risk Management: An Introduction

71. Hazard A. is the chance that something may be lost.

B. is the cause of a possible loss.

C. increases the likelihood of loss through some peril.

D. is loss possibilities due to negligence resulting in bodily harm or property damage to others.

E. is a risk that carries a chance of either loss or gain.

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-01 Develop a risk management plan using insurance.

Topic: 08-01 Insurance and Risk Management: An Introduction

8-22

Chapter 08 - Home and Automobile Insurance

72. Property risks A. are the chance that something may be lost.

B. are the cause of a possible loss.

C. are legally defined as uninsurable.

D. are the uncertainties of direct or indirect losses to property due to fire, windstorms, accidents, theft, and other hazards.

E. are loss possibilities due to negligence resulting in bodily harm or property damage to others.

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-01 Develop a risk management plan using insurance.

Topic: 08-01 Insurance and Risk Management: An Introduction

73. Liability risk A. carries a chance of either loss or gain, such as gambling or investing in a new business.

B. is the cause of a possible loss.

C. increases the likelihood of loss through some peril.

D. are the uncertainties of direct or indirect losses to property due to fire, windstorms, accidents, theft, and other hazards.

E. is loss possibilities due to negligence resulting in bodily harm or property damage to others.

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-01 Develop a risk management plan using insurance.

Topic: 08-01 Insurance and Risk Management: An Introduction

74. A speculative risk A. is the chance that something may be lost.

B. is the cause of a possible loss.

C. increases the likelihood of loss through some peril.

D. is the uncertainty of direct or indirect loss to property due to fire, windstorms, accidents, theft and other hazards.

E. is a risk that carries a chance of either loss or gain and are legally defined as uninsurable.

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-01 Develop a risk management plan using insurance.

Topic: 08-01 Insurance and Risk Management: An Introduction

8-23

Chapter 08 - Home and Automobile Insurance

75. Which of the following would be covered by a home insurance policy?

A. earthquake damage B. flooding C. brush fires D. fire damage to your garage E. theft of business supplies from your office

Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 08-03 Explain the insurance coverages and policy types available to homeowners and renters.

Topic: 08-09 Principles of Home and Property Insurance

76. Which of the following is considered personal property for home insurance coverage?

A. your automobile B. a fence C. a house D. furniture E. trees and shrubs

Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 08-03 Explain the insurance coverages and policy types available to homeowners and renters.

Topic: 08-09 Principles of Home and Property Insurance

77. Anne has an expensive diamond ring. Which coverage from the following list would pay for damage or theft of this item?

A. an umbrella policy B. a household inventory C. additional living expense coverage D. a personal articles endorsement E. a coinsurance floater

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-03 Explain the insurance coverages and policy types available to homeowners and renters.

Topic: 08-09 Principles of Home and Property Insurance

8-24

Chapter 08 - Home and Automobile Insurance

78. Tenant's insurance would include coverage for all of the following except A. additional living expense coverage.

B. personal liability.

C. automobile theft.

D. personal property.

E. protection against financial loss due to damage.

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-03 Explain the insurance coverages and policy types available to homeowners and renters.

Topic: 08-09 Principles of Home and Property Insurance

79. Your home insurance provides for replacement value for personal property losses. A television is stolen. It cost $1,000 two years ago and has an expected life of 5 years. A comparable television costs $500 today. What amount will the insurance company pay?

A. $100 B. $150 C. $200 D. $350 E. $500

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-04 Analyze factors that influence the amount of coverage and cost of home insurance.

Topic: 08-14 Home Insurance Cost Factors

80. If you have a $2,000 claim resulting from a fire in your home and your policy stipulates that your deductible is $500, then the insurance company will pay you A. $2,000 B. $1,500 C. $1,000 D. $500 E. $2,500

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-04 Analyze factors that influence the amount of coverage and cost of home insurance.

Topic: 08-14 Home Insurance Cost Factors

8-25

Chapter 08 - Home and Automobile Insurance

81. If you have a $500 claim resulting from a fire in your home and your policy stipulates that your deductible is $500, then the insurance company will pay you A. $0 B. $100 C. $150 D. $250 E. $500

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-04 Analyze factors that influence the amount of coverage and cost of home insurance.

Topic: 08-14 Home Insurance Cost Factors

82. Under the ____________ method for settling claims you receive the full cost of repairing or replacing a damaged or lost item and depreciation is not considered.

A. replacement value B. actual cash value C. umbrella D. endorsement E. personal articles endorsement

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-04 Analyze factors that influence the amount of coverage and cost of home insurance.

Topic: 08-14 Home Insurance Cost Factors

83. ________ is an automobile insurance program in which drivers involved in accidents collect medical expenses, lost wages, and related injury costs from their own insurance companies.

A. Medical payments B. No-fault insurance C. Uninsured motorist's protection D. Bodily injury liability E. Comprehensive insurance

Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 08-05 Identify the important types of automobile insurance coverages.

Topic: 08-19 Automobile Insurance Coverages

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Chapter 08 - Home and Automobile Insurance

84. Wind damage occurs to your car costing $3,000 to repair. If you have a $500 deductible for collision and full coverage for comprehensive, what portion of the claim will the insurance company pay?

A. $500 B. $1,300 C. $2,500 D. $3,000 E. $3,500

Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 08-05 Identify the important types of automobile insurance coverages.

Topic: 08-19 Automobile Insurance Coverages

85. Which of the following refers to a category based on your place of residence that is used to set automobile insurance premiums?

A. rating territory B. assigned risk pool C. no-fault system D. driver classification E. use of the vehicle

Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 08-06 Evaluate factors that affect the cost of automobile insurance.

Topic: 08-22 Automobile Insurance Costs

86. Not driving to work is an example of what risk management technique?

A. Risk avoidance B. Risk reduction C. Risk assumption D. Risk education E. Self-insurance

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-01 Develop a risk management plan using insurance.

Topic: 08-01 Insurance and Risk Management: An Introduction

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Chapter 08 - Home and Automobile Insurance

87. What private sector strategy is used for illness?

A. Health insurance B. Life insurance C. Pension D. Auto insurance E. Home owner insurance

Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 08-01 Develop a risk management plan using insurance.

Topic: 08-01 Insurance and Risk Management: An Introduction

88. What private sector strategy is used for death?

A. Health insurance B. Life insurance C. Pension D. Auto insurance E. Home owner insurance

Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 08-01 Develop a risk management plan using insurance.

Topic: 08-01 Insurance and Risk Management: An Introduction

89. What type of liability is present when a person is held responsible for intentional or unintentional actions?

A. Strict B. Vicarious C. Unlimited D. Limited E. Negligence

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-02 Discuss the importance of property and liability insurance.

Topic: 08-06 Property and Liability Insurance

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Chapter 08 - Home and Automobile Insurance

90. What type of liability is present when a person is held responsible for the actions of another?

A. Strict B. Vicarious C. Unlimited D. Limited E. Negligence

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-02 Discuss the importance of property and liability insurance.

Topic: 08-06 Property and Liability Insurance

91. What personal property is specifically excluded from coverage by a homeowner's insurance?

A. Washers and dryers B. Stoves C. Animals D. Inexpensive Electronics E. Carpet

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-03 Explain the insurance coverages and policy types available to homeowners and renters.

Topic: 08-09 Principles of Home and Property Insurance

92. What personal property is specifically excluded from coverage by a homeowner's insurance?

A. Washers and dryers B. Stoves C. Rental portion of the home D. Inexpensive Electronics E. Carpet

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-03 Explain the insurance coverages and policy types available to homeowners and renters.

Topic: 08-09 Principles of Home and Property Insurance

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Chapter 08 - Home and Automobile Insurance

93. What personal property is specifically excluded from coverage by a homeowner's insurance?

A. Washers and dryers B. Stoves C. Any device or instrument for the transmission and recording of sound D. Inexpensive Electronics E. Carpet

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-03 Explain the insurance coverages and policy types available to homeowners and renters.

Topic: 08-09 Principles of Home and Property Insurance

94. What is not a determining factor when considering the amount of home insurance you need, as per the text?

A. Replacement value of the home B. Value of the contents C. Amount you can afford D. Liability coverage desired E. Protection for specific items such as jewelry and personal electronics

Accessibility: Keyboard Navigation Difficulty: Hard Learning Objective: 08-04 Analyze factors that influence the amount of coverage and cost of home insurance.

Topic: 08-14 Home Insurance Cost Factors

95. Risks such as fire, theft, glass breakage, falling objects, vandalism, wind, hail, flood, tornado, lightning, earthquake, avalanche, or damage caused by hitting an animal are covered by what type of auto insurance?

A. Bodily injury B. Accident Benefits C. Uninsured motorist's protection D. Property damage E. Comprehensive physical damage

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-05 Identify the important types of automobile insurance coverages.

Topic: 08-19 Automobile Insurance Coverages

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Chapter 08 - Home and Automobile Insurance

96. Risk of financial loss due to legal expenses, medical expenses, lost wages, and other expenses associated with injuries caused by an automobile accident for which you were responsible are covered by what type of auto insurance?

A. Bodily injury B. Accident Benefits C. Uninsured motorist's protection D. Property damage E. Comprehensive physical damage

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-05 Identify the important types of automobile insurance coverages.

Topic: 08-19 Automobile Insurance Coverages

97. Coverage for income replacement, medical, rehabilitation and attendant care expenses, and death and funeral costs for people who were injured in your automobile, including yourself are covered by what type of auto insurance?

A. Bodily injury B. Accident Benefits C. Uninsured motorist's protection D. Property damage E. Comprehensive physical damage

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-05 Identify the important types of automobile insurance coverages.

Topic: 08-19 Automobile Insurance Coverages

98. An accident caused by an unidentified person is covered by what type of auto insurance?

A. Bodily injury B. Accident Benefits C. Uninsured motorist's protection D. Property damage E. Comprehensive physical damage

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-05 Identify the important types of automobile insurance coverages.

Topic: 08-19 Automobile Insurance Coverages

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Chapter 08 - Home and Automobile Insurance

99. Auto insurance premiums are not affected by?

A. Make and style of car B. Use of Vehicle C. Color of vehicle D. Driver classification E. Provincial differences

Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 08-06 Evaluate factors that affect the cost of automobile insurance.

Topic: 08-22 Automobile Insurance Costs

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