Overwhelming

8

1. 
   Insurance is protection against possible financial loss. True False
   
2. 
   Samuel should buy insurance in order to eliminate his risk. True False
   
3. 
   An example of a peril is a robbery. True False
   
4. 
   An example of a hazard is defective house wiring. True False
   
5. 
   An example of a peril is defective wiring. True False
   
6. 
   Risk avoidance is an organized plan for protecting yourself, your family, and your property. True False
   
7. 
   Risk management is an organized plan for protecting yourself, your family, and your property. True False
   
8. 
   The first step to setting up an insurance program is to set insurance goals. True False
   
9. 
   Jim and Sandy are setting up their insurance program. One of their goals should be to reduce the possible loss of income due to fire or theft.
   

10. 
    An important question that should be asked when setting up an insurance program is "What do I need to insure?"
    

11. 
    Once a risk management plan is in place, the insurance programs that were set up should remain the same even as family needs change.
    

12. 
    An insurance claim is a request for payment to cover financial losses. True False
    
13. 
    Caroline was found liable in an accident. This was probably not due to negligence on her part. True False
    
14. 
    A homeowner policy provides coverage for additional living expenses after a fire. True False
    
15. 
    Homeowner's insurance excludes detached structures. True False
    
16. 
    A household inventory should be stored in a home office. True False
    
17. 
    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's policy.
    

18. 
    Another name for a homeowner's insurance policy is an umbrella policy. True False
    
19. 
    The National Flood Insurance Program makes flood and earthquake insurance available for all homeowners.
    

20. 
    A landlord is responsible for paying renter's insurance. True False
    
21. 
    Insurance coverage for a rental is more expensive than insurance coverage for a mobile home. True False
    
22. 
    Mortgage lenders require that homeowners purchase home insurance. True False
    
23. 
    Sam's house should be insured for the amount he originally paid for it. True False
    
24. 
    The actual cash value method of settling claims is based on the replacement cost of an item less depreciation.
    

25. 
    A brick home should usually cost less to insure than a similar structure made of wood. True False
    
26. 
    Angela should decrease her deductible from $1,000 to $250 in order to reduce her home insurance premium.
    

27. 
    If you need information to compare Acme Home Insurance and Zebra Home Insurance, you should contact the state insurance commissioner or a consumer organization that deals with insurance. True False
    
28. 
    Every state in the United States has a law requiring people to carry motor vehicle insurance. True False
    
29. 
    Motor vehicle insurance falls into two categories: protection for bodily injury and protection for property damage.
    

30. 
    Uninsured motorist's protection automatically covers you and your family members as well as damage to the vehicle itself.
    

31. 
    Collision insurance covers your vehicle against risks such as falling objects and hail. True False
    
32. 
    Emergency road service coverage includes coverage for a tow to a service station as well as repairs to make the vehicle drivable.
    

33. 
    If you drive a model of vehicle that is frequently stolen, you should expect to pay a higher premium for your auto insurance.
    

34. 
    If you live in a city, you should expect to pay a higher premium for your auto insurance than someone who lives in a rural area.
    

35. 
    An assigned risk pool is a method of calculating the insurance premiums for various groups of drivers.
    

36. 
    It is illegal to use a credit score to determine the premium to charge an individual. True False
    
37. 
    One way to keep auto insurance rates down is to insure each vehicle you own with a different insurer. True False
    
38. 
    An individual who purchases insurance is
    
    1. 
       The insurance company.
       
    2. 
       A policyholder.
       
    3. 
       An insurer.
       
    4. 
       A victim.
       
    5. 
       An employer.
       
39. 
    What is the fee that a policyholder pays when an insurance company agrees to take on the risk?
    
    1. 
       Coverage
       
    2. 
       Insured
       
    3. 
       Premium
       
    4. 
       Peril
       
    5. 
       Risk
       
40. 
    Insurance allows someone to
    
    1. 
       Reduce risk.
       
    2. 
       Assume risk.
       
    3. 
       Shift risk.
       
    4. 
       Avoid risk.
       
    5. 
       Eliminate risk.
       
41. 
    Barbara left a skateboard on her front steps. Her neighbor tripped on the skateboard and was injured. The skateboard was a
    
    1. 
       Hazard.
       
    2. 
       Negligence.
       
    3. 
       Peril.
       
    4. 
       Premium.
       
    5. 
       Risk.
       
42. 
    Barbara left a skateboard on her front steps. Her neighbor tripped on the skateboard and was injured. The fact that Barbara didn't put away the skateboard is called
    
    1. 
       Hazard.
       
    2. 
       Negligence.
       
    3. 
       Peril.
       
    4. 
       Premium.
       
    5. 
       Risk.
       
43. 
    Barbara left a skateboard on her front steps. A windstorm swept the skateboard up and through her window. The windstorm was a
    
    1. 
       Hazard.
       
    2. 
       Negligence.
       
    3. 
       Peril.
       
    4. 
       Premium.
       
    5. 
       Risk.
       
44. 
    The most common risks are
    
    1. 
       Personal risks.
       
    2. 
       Property risks.
       
    3. 
       Liability risks.
       
    4. 
       All of these are common risks.
       
    5. 
       None of these are common risks.
       
45. 
    Anything that may possibly cause a loss is called a
    
    1. 
       Hazard.
       
    2. 
       Negligence.
       
    3. 
       Peril.
       
    4. 
       Premium.
       
    5. 
       Speculation.
       
46. 
    The failure to take ordinary or reasonable care to prevent accidents from happening is called
    
    1. 
       Hazard.
       
    2. 
       Negligence.
       
    3. 
       Peril.
       
    4. 
       Premium.
       
    5. 
       Risk.
       
47. 
    An insurance company will
    
    1. 
       Insure speculative and pure risks.
       
    2. 
       Insure pure risk, but not speculative risk.
       
    3. 
       Insure neither pure risk nor speculative risk.
       
    4. 
       Insure speculative risk, but not pure risk.
       
    5. 
       Insure all types of risks.
       
48. 
    Which of the following is NOT one of the commonly used general risk management techniques?
    
    1. 
       Reduce risk
       
    2. 
       Assume risk
       
    3. 
       Shift risk
       
    4. 
       Avoid risk
       
    5. 
       Increase risk
       
49. 
    If you choose to avoid the risk of a traffic accident by not driving to work, you are using
    
    1. 
       Risk avoidance.
       
    2. 
       Risk reduction.
       
    3. 
       Risk assumption.
       
    4. 
       Risk shifting.
       
    5. 
       Risk increasing.
       
50. 
    If you choose to wear your seatbelt, you are using
    
    1. 
       Risk avoidance.
       
    2. 
       Risk reduction.
       
    3. 
       Risk assumption.
       
    4. 
       Risk shifting.
       
    5. 
       Risk increasing.
       
51. 
    If you choose to take responsibility for negative results of a risk, you are using
    
    1. 
       Risk avoidance.
       
    2. 
       Risk reduction.
       
    3. 
       Risk assumption.
       
    4. 
       Risk shifting.
       
    5. 
       Risk increasing.
       
52. 
    If you choose to insure your home or your vehicle, you are using
    
    1. 
       Risk avoidance.
       
    2. 
       Risk reduction.
       
    3. 
       Risk assumption.
       
    4. 
       Risk shifting.
       
    5. 
       Risk increasing.
       
53. 
    An insurance program
    
    1. 
       Should be constant through one's life.
       
    2. 
       Should change along with needs and goals.
       
    3. 
       Should minimize personal property and liability risks.
       
    4. 
       Should be constant through one's life, and should minimize personal property and liability risks.
       
    5. 
       Should minimize personal property and liability risks, and change along with one's needs and goals.
       
54. 
    Which of the following questions should one ask when developing a risk management plan?
    
    1. 
       What do I need to insure?
       
    2. 
       How much should I insure something for?
       
    3. 
       What kind of insurance should I buy?
       
    4. 
       Whom should I buy insurance from?
       
    5. 
       All of these questions should be asked when developing a risk management plan.
       
55. 
    Which of the following is correct?
    
    1. 
       The best risk management plan is constant through one's life.
       
    2. 
       Once a plan is set up, it should be reviewed every 10 years.
       
    3. 
       A solid risk management plan works well without insurance as a component.
       
    4. 
       One question that should be asked when developing a risk management plan is "What do I need to insure?"
       
    5. 
       The main goal of insurance should be to maximize personal, property, and liability risks.
       
56. 
    The two basic types of risk that people face regarding their personal property are
    
    1. 
       Basic and criminal.
       
    2. 
       Physical damage and destruction.
       
    3. 
       Destruction and basic.
       
    4. 
       Physical damage and damage caused by criminal behavior.
       
    5. 
       Negligence and criminal behavior.
       
57. 
    Liability is defined as
    
    1. 
       An insurance program for individuals and households.
       
    2. 
       The legal responsibility for the financial cost of another person's losses or injuries.
       
    3. 
       Negligence.
       
    4. 
       A loss due to physical damage.
       
    5. 
       Risk assumption.
       
58. 
    Homeowner's insurance covers all of the following except
    
    1. 
       Personal property.
       
    2. 
       Personal liability.
       
    3. 
       Additional living expenses.
       
    4. 
       Automobiles.
       
    5. 
       Building and other structures on the property.
       
59. 
    Homeowner's insurance covers all of the following except
    
    1. 
       A detached garage.
       
    2. 
       Trees and shrubs.
       
    3. 
       A tool shed.
       
    4. 
       Personal property.
       
    5. 
       All of these are covered.
       
60. 
    Homeowner's insurance covers all of the following except
    
    1. 
       Three months in a hotel after a house fire.
       
    2. 
       Theft of a diamond necklace valued at $25,000.
       
    3. 
       A three-year-old television.
       
    4. 
       A fire that damages your neighbor's roof that was caused by a spark from your grill.
       
    5. 
       Medical costs for a visitor who slipped on your steps and broke his ankle.
       
61. 
    The best place to keep a household inventory is
    
    1. 
       On a bookshelf in the family room.
       
    2. 
       In the freezer.
       
    3. 
       In the attic.
       
    4. 
       In a safe deposit box.
       
    5. 
       In the garage.
       
62. 
    All of the following are acceptable types of documentation for a household inventory except
    
    1. 
       Photographs with dates purchased and values of objects listed on the backs.
       
    2. 
       Video recordings of assets.
       
    3. 
       Written listings of items, purchase prices, and assets.
       
    4. 
       Computerized spreadsheets with details about the items and their ages and costs.
       
    5. 
       A listing of items and their details in your memory.
       
63. 
    Insurance that covers valuable items, such as an expensive harp, is called
    
    1. 
       Buildings and other structures coverage.
       
    2. 
       Homeowner's insurance.
       
    3. 
       Personal property floater.
       
    4. 
       Household inventory insurance.
       
    5. 
       Personal property insurance.
       
64. 
    Personal property insurance covers
    
    1. 
       All personal property.
       
    2. 
       Furniture and appliances, but not clothing or some electronics.
       
    3. 
       Clothing and some electronics, but not furniture and appliances.
       
    4. 
       All items up to 200% of the insured value of the home.
       
    5. 
       Personal property items up to 55-75% of the insured value of the home.
       
65. 
    Personal liability coverage does NOT protect
    
    1. 
       An occasional babysitter.
       
    2. 
       The homeowner.
       
    3. 
       A visitor.
       
    4. 
       Members of the homeowner's family.
       
    5. 
       A housekeeper.
       
66. 
    A policy that supplements your basic personal liability coverage is called a(n)
    
    1. 
       Endorsement.
       
    2. 
       Homeowner's insurance.
       
    3. 
       Medical payments coverage.
       
    4. 
       Supplementary policy.
       
    5. 
       Umbrella policy.
       
67. 
    When Stanley was visiting Elaine, he tripped on her front porch step and sprained his ankle. His injuries were covered by
    
    1. 
       Elaine's medical payments coverage.
       
    2. 
       Stanley homeowner's policy.
       
    3. 
       Elaine's health insurance coverage.
       
    4. 
       Elaine's life insurance policy.
       
    5. 
       The insurance policy of the mason who installed the front porch step 15 years ago.
       
68. 
    If you have a loss due to a flood,
    
    1. 
       Your homeowner's insurance should normally cover the loss.
       
    2. 
       You need to have purchased special coverage if you live in an area that has frequent floods in order to be covered.
       

4. 
   You need an umbrella policy for coverage.
   
5. 
   Your additional living expenses coverage will apply if you move to an area that has not flooded in one year.
   

69. 
    Which of the following is NOT correct about renter's insurance?
    
    1. 
       The broad form covers personal property against perils specified in the policy.
       
    2. 
       Renter's insurance covers the building and other structures on the site.
       
    3. 
       The comprehensive form protects personal property against perils not specifically excluded in the policy.
       
    4. 
       Typical coverage pays only the actual cash value of one's losses.
       
    5. 
       Renter's insurance includes personal property protection, additional living expenses, and personal liability.
       
70. 
    Homeowner's insurance includes all of the forms listed here except
    
    1. 
       HO-1.
       
    2. 
       HO-2.
       
    3. 
       HO-5.
       
    4. 
       HO-6.
       
    5. 
       HO-8.
       
71. 
    Home insurance policies include coverage for all of the following except
    
    1. 
       Credit card fraud.
       
    2. 
       The cost of removing damaged property.
       
    3. 
       Temporary repairs after a loss to prevent further damage.
       
    4. 
       Business property.
       
    5. 
       Emergency removal of property to protect it from damage.
       
72. 
    Vincent is applying for insurance for his new home. Which of the following is correct?
    
    1. 
       He should base the amount of insurance on the price he paid for it.
       
    2. 
       He should insure the building for 75% of its replacement cost.
       

. replacing his personal belongings.

4. 
   His personal belongings should automatically be covered with his home at 55-75% of his home's insured amount.
   
5. 
   His insured amount should remain the same as long as he lives in his house.
   

73. 
    Yogi is applying for insurance for his new home. Which of the following is correct?
    
    1. 
       He should base the amount of insurance on the price to rebuild or repair it.
       
    2. 
       He should insure the building for 75% of its replacement cost.
       

. replacing his personal belongings.

4. 
   His personal belongings should automatically be covered with his home at 125% of his home's insured amount.
   
5. 
   His insured amount should remain the same as long as he lives in his house.
   

74. 
    Zach is applying for insurance for his new home. Which of the following is correct?
    
    1. 
       He should base the amount of insurance on the price he paid for it.
       
    2. 
       He should insure the building for its replacement value to receive the full cost of repairing or replacing it.
       

. replacing his personal belongings.

4. 
   His personal belongings should automatically be covered with his home at 125% of his home's insured amount.
   
5. 
   His insured amount should remain the same as long as he lives in his house.
   

75. 
    Andrew is applying for insurance for his new home. Which of the following is correct?
    
    1. 
       He should base the amount of insurance on the price he paid for it.
       
    2. 
       He should insure the building for 75% of its replacement cost.
       

. replacing his personal belongings.

4. 
   His personal belongings should automatically be covered with his home at 125% of his home's insured amount.
   
5. 
   His insured amount should remain the same as long as he lives in his house.
   

76. 
    Barnaby is applying for insurance for his new home. Which of the following is correct?
    
    1. 
       He should base the amount of insurance on the price he paid for it.
       
    2. 
       He should insure the building for 75% of its replacement cost.
       

. replacing his personal belongings.

4. 
   His personal belongings should automatically be covered with his home at 125% of his home's insured amount.
   
5. 
   His policy should automatically increase coverage as construction costs rise.
   

77. 
    Sandra is contacting several insurance companies to compare coverage for her home. Which of the following should NOT affect her premium?
    
    1. 
       Alarm system
       
    2. 
       Amount of coverage
       
    3. 
       Type of structure
       
    4. 
       Deductible
       
    5. 
       Proximity to a school
       
78. 
    Cindy was contacted by her home insurance agent to discuss ways to decrease her premium. Which of the following should NOT reduce her premium?
    
    1. 
       Installing an alarm system.
       
    2. 
       Increasing the amount of coverage.
       
    3. 
       Installing smoke detectors or a fire extinguisher.
       
    4. 
       Increasing her deductible.
       
    5. 
       All of these should reduce her premium.
       
79. 
    Tom wanted to receive as many discounts on his home insurance as possible. Which of the following would NOT provide a discount?
    
    1. 
       Smoke detector.
       
    2. 
       Fire extinguisher.
       
    3. 
       Deadbolt locks.
       
    4. 
       Alarm systems.
       
    5. 
       All of these should provide a discount for Tom.
       
80. 
    Motor vehicle crashes cost more than in lost wages and medical bills every year. A. $10,000
    

3. 
   $12 million
   
4. 
   $150 billion
   
5. 
   $2 trillion
   

81. 
    Amber had permission from Bradley to borrow his car to run some errands. Unfortunately, while Amber was driving, she looked down to change songs on her iPod and sideswiped a car and hit a bicyclist. Based on her experience, which of the following would be true?
    

3. 
   Amber's insurance should not cover any damage since she carried liability, collision, and comprehensive coverage.
   
4. 
   The bicyclist should cover his own medical expenses because he was at fault for riding on the road.
   
5. 
   Amber's insurance policy should cover any property damage claims since she was driving Bradley's car with his permission.
   

82. 
    Motor vehicle coverage typically includes all of the following except
    
    1. 
       Most legal expenses.
       
    2. 
       Bodily injury liability up to a specific level for all injured in an accident.
       
    3. 
       Medical payments up to a policy limit.
       
    4. 
       Bodily injury liability of all expenses, no matter the cost, for the most injured.
       
    5. 
       Uninsured motorist's protection.
       
83. 
    Medical payments coverage applies to medical expenses of
    
    1. 
       Anyone in your vehicle, including you.
       
    2. 
       Anyone in your vehicle who is injured, except the driver.
       
    3. 
       The driver, but no passengers who are injured.
       
    4. 
       The owner of the vehicle, but not other passengers.
       
    5. 
       The uninsured motorist who causes an accident.
       
84. 
    Paul was driving his kids to a piano lesson in a 2005 minivan. While driving, he was hit by an uninsured motorist. Although Paul and his kids had only minor injuries, their vehicle was totaled. Based on this information, which of the following is correct?
    
    1. 
       The uninsured motorist needs to purchase insurance after the fact.
       
    2. 
       Paul's uninsured motorist's protection should cover medical expenses for Paul and his kids.
       
    3. 
       The uninsured motorist will be required to purchase a new minivan for Paul's family.
       
    4. 
       It is likely that the uninsured motorist will not receive any citations or fines because she did not have insurance.
       
    5. 
       In all states, Paul's uninsured motorist's coverage must cover damage to all vehicles involved in the accident.
       
85. 
    Timothy was driving his friend Nick to football practice. While driving, he was hit by a driver who had coverage of 100/300/50. Tim and Nick each suffered some physical injuries. Based on this information, which of the following is correct?
    
    1. 
       Timothy's injuries would be covered to $100 and property damage would be limited to $300.
       
    2. 
       Nick's injuries would be covered to $50,000.
       
    3. 
       Individually, Timothy and Nick's injuries would be covered to $300,000 each.
       

. would be covered to $50,000.

E The policy would provide a maximum of $100,000 for each of the injured, and no more than $300,000

. for total injuries sustained in the accident.

86. 
    Sammy was driving on the highway and drove over a piece of metal that was on the highway. The metal punctured her gas tank. This damage would be covered under her
    
    1. 
       Uninsured motorist's protection.
       
    2. 
       Property damage liability policy.
       
    3. 
       Collision policy.
       
    4. 
       Comprehensive physical damage policy.
       
    5. 
       Bodily injury liability policy.
       
87. 
    Madeline 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 Madeline's
    
    1. 
       Uninsured motorist's protection.
       
    2. 
       Property damage liability policy.
       
    3. 
       Collision policy.
       
    4. 
       Comprehensive physical damage policy.
       
    5. 
       Bodily injury liability policy.
       
88. 
    Henry was driving at dusk and hit a deer running across the road. His damage would be covered under his
    
    1. 
       Uninsured motorist's protection.
       
    2. 
       Property damage liability policy.
       
    3. 
       Collision policy.
       
    4. 
       Comprehensive physical damage policy.
       
    5. 
       Bodily injury liability policy.
       
89. 
    Patrick has an old beater car and wants to keep his insurance costs down. In order to minimize the financial impact of an accident he may cause, he should, at a minimum, carry which type of insurance?
    

1. 
   Property damage liability.
   
2. 
   Collision.
   
3. 
   Comprehensive physical damage.
   
4. 
   All of these are required for all vehicles.
   
5. 
   No coverage is required for any driver in the United States.
   
1. 
   Al left his vehicle parked on the street in the front of his house when he went on vacation. While he was gone, his street flooded and his car was severely damaged. This damage would be covered under his
   
   1. 
      Uninsured motorist's protection.
      
   2. 
      Property damage liability policy.
      
   3. 
      Collision policy.
      
   4. 
      Comprehensive physical damage policy.
      
   5. 
      Bodily injury liability policy.
      
2. 
   Zachary lived in a neighborhood that was known for gang activity. One day, he noticed that his car had been vandalized. This damage would be covered under his
   
   1. 
      Uninsured motorist's protection.
      
   2. 
      Property damage liability policy.
      
   3. 
      Collision policy.
      
   4. 
      Comprehensive physical damage policy.
      
   5. 
      The vehicle would not be covered because he was not in it when the damage occurred.
      
3. 
   Various states are trying to reduce the time and cost of settling vehicle injury cases. One alternative is
   
   1. 
      Omitting uninsured motorist's protection.
      
   2. 
      Requiring the driver to pay all medical expenses.
      
   3. 
      Using the no-fault system.
      
   4. 
      Requiring emergency road service coverage.
      
   5. 
      Having the state pay for driver's insurance.
      
4. 
   Which of the following is NOT a type of motor vehicle insurance available to drivers?
   
   1. 
      Wage loss insurance
      
   2. 
      Emergency road service coverage
      
   3. 
      Rental reimbursement coverage
      
   4. 
      All of these may be available to drivers
      
   5. 
      Nonel of these is optional.
      
5. 
   Which of the following is NOT correct?
   
   1. 
      If you live in a rural area, your auto insurance premium will likely be lower than if you live in a city.
      
   2. 
      In general, young drivers (under 25) and elderly drivers (over 70) have more frequent and more serious accidents.
      
   3. 
      Multiple accidents or traffic violations can increase insurance rates.
      
   4. 
      The number of small claims you have should not affect your premium.
      
   5. 
      Your credit score can cause your premium to change.
      
6. 
   Which of the following should reduce your auto insurance premium?
   
   1. 
      Celebrate your 70^th birthday
      
   2. 
      Get a speeding ticket
      
   3. 
      Get good grades in college
      
   4. 
      Move from a farm to a city
      
   5. 
      Start smoking
      
7. 
   Cheyenne has a home insured for $300,000. It would cost $320,000 to rebuild her home. If she has home insurance that provides personal property coverage at 70% of value, how much of her belongings would be covered?
   

97. 
    Sally was driving her own car and collided with a pickup truck. Sally sustained $125,000 in injuries, and her passenger sustained $10,000 in injuries. If her coverage was 100/300/50, what are the total medical expenses the insurance company would pay for this accident?
    

98. 
    Last month some of your friends were injured in an accident. Their total injuries were as follows:
    

B. $85,000 C. $125,000 D. $225,000 E. $250,000

99. 
    What is the difference between a pure risk and a speculative risk?
    
100. 
     Explain two ways that someone may choose to manage risk. Include an example of each method.
     

101. 
     What should an insurance program's main goal be?
     

102. 
     What are some questions that someone should ask when developing a risk management plan?
     

103. 
     Two main types of risk are related to your home and your vehicle. What are these main risks?
     

104. 
     What is an example of a property loss?
     

105. 
     List three types of coverage in a homeowner's insurance policy.
     
106. 
     Daniel's house was severely damaged in a fire, and he needed to file a claim for his personal property losses. What would facilitate the processing of his insurance claim? Explain your answer.
     

107. 
     What is the purpose of a personal property floater?
     

108. 
     What is the purpose of an umbrella policy?
     

109. 
     Identify at least three home insurance policy forms, and list the coverages of each.
     

110. 
     Discuss the amount of home insurance you should have.
     

111. 
     List four factors that affect the cost of home insurance and examine how each affects this cost.
     
112. 
     Why is it important to compare home insurance companies?
     

113. 
     Discuss what 100/300/50 means with relation to liability coverage for automobile insurance.
     

114. 
     Explain the coverage under the following and provide an example of each:
     

1. 
   Property damage liability.
   
2. 
   Collision.
   
3. 
   Comprehensive physical damage.
   

115. 
     What are three ways that you can maintain or reduce your auto insurance rates?