Test Bank Chapter 10 Property and Motor Vehicle Insurance

Personal Finance, 13e (Kapoor)

Chapter 10 Property and Motor Vehicle Insurance

1) The purpose of insurance is to help protect you and your family against possible financial loss.

Difficulty: 1 Easy

Topic: Risk management

Learning Objective: 10-01 Develop a risk management plan using insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

2) Risk management is an organized strategy for protecting and conserving assets and people.

Difficulty: 1 Easy

Topic: Risk management

Learning Objective: 10-01 Develop a risk management plan using insurance.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

3) Homeowner's insurance refers to coverage also available to condominium owners.

Difficulty: 1 Easy

Topic: Homeowner's insurance

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

4) Personal belongings that have a high value can be protected with a personal property floater.

Difficulty: 2 Medium

Topic: Homeowner's insurance endorsements

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

5) A household inventory helps to provide evidence of ownership and value of items covered by home insurance.

Difficulty: 1 Easy

Topic: Personal property insurance

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

6) An umbrella policy provides additional personal liability coverage beyond the basic amounts in most homeowner policies.

Difficulty: 2 Medium

Topic: Umbrella policies

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

7) 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.

Difficulty: 2 Medium

Topic: Homeowner's insurance policy provisions

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

8) The comprehensive form (HO-5) of homeowner's insurance includes coverage for damage due to floods.

Difficulty: 1 Easy

Topic: Types of homeowner's policy forms

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

9) Replacement value for settling property insurance claims is less costly than the actual cash value method.

Difficulty: 3 Hard

Topic: Homeowner's claims settlement methods

Learning Objective: 10-04 Analyze factors that influence the amount of coverage and the cost of home insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

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

Difficulty: 1 Easy

Topic: Homeowner's insurance cost factors

Learning Objective: 10-04 Analyze factors that influence the amount of coverage and the cost of home insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

11) The 100/300 amounts for bodily injury liability insurance refer to the premium associated with insurance coverage.

Difficulty: 1 Easy

Topic: Auto insurance - bodily injury coverages

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

12) Medical payments coverage in an automobile insurance policy pays for the costs of injuries to persons in the driver's vehicle.

Difficulty: 1 Easy

Topic: Auto insurance - bodily injury coverages

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

13) No-fault insurance systems always reduce the time and costs involved in settling auto injury claims.

Difficulty: 2 Medium

Topic: No-fault insurance

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

14) Property damage liability coverage would pay for damage to another vehicle for which you were at fault.

Difficulty: 1 Easy

Topic: Auto insurance - property damage coverages

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

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

Difficulty: 2 Medium

Topic: Auto insurance cost factors

Learning Objective: 10-06 Evaluate factors that affect the cost of automobile insurance.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

16) The purpose of an assigned risk pool is to assist people with poor driving records in obtaining automobile insurance coverage.

Difficulty: 2 Medium

Topic: Auto insurance cost factors

Learning Objective: 10-06 Evaluate factors that affect the cost of automobile insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

17) Peril is defined as:

A) the refusal by an insurance company to pay for a loss.

B) the cause of risk.

C) the cause of a possible loss.

D) an uncertainty as to loss.

E) safety.

Difficulty: 3 Hard

Topic: Insurance terminology

Learning Objective: 10-01 Develop a risk management plan using insurance.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

18) Defective house wiring is an example of a:

A) hazard.

B) peril.

C) risk.

D) speculation.

E) planned danger.

Difficulty: 2 Medium

Topic: Types of risk

Learning Objective: 10-01 Develop a risk management plan using insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

19) The uncertainties of direct and indirect losses to personal or real property due to fire, windstorms, accidents, theft, and other hazards are called ________ risks.

A) personal

B) business

C) property

D) liability

E) speculative

Difficulty: 2 Medium

Topic: Types of risk

Learning Objective: 10-01 Develop a risk management plan using insurance.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

20) Possible losses due to negligence resulting in bodily injury or property damage to others are called ________ risks.

A) speculative

B) liability

C) property

D) personal

E) commercial

Difficulty: 2 Medium

Topic: Types of risk

Learning Objective: 10-01 Develop a risk management plan using insurance.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

21) Starting a small business that may or may not succeed is an example of ________ risk.

A) speculative

B) pure

C) commercial

D) personal

E) liability

Difficulty: 2 Medium

Topic: Types of risk

Learning Objective: 10-01 Develop a risk management plan using insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

22) Eating a balanced diet and exercising is an example of risk ________.

A) shifting

B) acceptance

C) reduction

D) assumption

E) avoidance

Difficulty: 1 Easy

Topic: Risk management

Learning Objective: 10-01 Develop a risk management plan using insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

23) Wearing a seat belt in an automobile to protect yourself against the risk of injury in an automobile accident is an example of risk ________.

A) reduction

B) acceptance

C) pooling

D) shifting

E) avoidance

Difficulty: 1 Easy

Topic: Risk management

Learning Objective: 10-01 Develop a risk management plan using insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

24) Which of the following would be covered by a home insurance policy?

A) Hospital expenses for surgery

B) Injury to animals, birds, or fish

C) Boats and aircraft

D) Damage to your roof from hail

E) Theft of business supplies from your office

Difficulty: 1 Easy

Topic: Homeowner's insurance policy provisions

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

25) 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.

Difficulty: 2 Medium

Topic: Insurance terminology

Learning Objective: 10-02 Discuss the importance of property and liability insurance.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

26) If a homeowner leaves toys on stairs that results in injury to a delivery person, this may be ruled as:

A) vicarious liability.

B) negligence.

C) assigned risk.

D) umbrella coverage.

E) coinsurance.

Difficulty: 2 Medium

Topic: Insurance terminology

Learning Objective: 10-02 Discuss the importance of property and liability insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

27) Negligence refers to:

A) failure to take ordinary or reasonable care.

B) cancellation of insurance.

C) property damage.

D) high risk insurance coverage.

E) common hazards in our society.

Difficulty: 2 Medium

Topic: Insurance terminology

Learning Objective: 10-02 Discuss the importance of property and liability insurance.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

28) 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

Difficulty: 2 Medium

Topic: Insurance terminology

Learning Objective: 10-02 Discuss the importance of property and liability insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

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

A) additional living expenses

B) personal property

C) house and other structures

D) personal liability

E) specialized coverage

Difficulty: 3 Hard

Topic: Homeowner's insurance policy provisions

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

30) The additional living expenses component of a homeowner's 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.

Difficulty: 2 Medium

Topic: Homeowner's insurance policy provisions

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

31) Which of the following is considered personal property for home insurance coverage?

A) Automobile

B) Garage

C) Furniture

D) House

E) Trees and shrubs

Difficulty: 1 Easy

Topic: Personal property insurance

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

32) Georgette Valentine has expensive photography equipment for use in her hobby. Which one of the following types of coverage would pay for damage or theft of this equipment?

A) Umbrella policy

B) Personal liability

C) Additional living expense coverage

D) Personal property floater

E) Coinsurance floater

Difficulty: 2 Medium

Topic: Homeowner's insurance endorsements

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

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

A) supplementary

B) personal property

C) medical payments

D) additional living expenses

E) voluntary liability

Difficulty: 2 Medium

Topic: Homeowner's insurance policy provisions

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

34) 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) major personal liability claims.

E) flood damage.

Difficulty: 2 Medium

Topic: Umbrella policies

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

35) Most home insurance policies provide coverage for minor accidental injuries on your property under:

A) earthquake damage.

B) flood damage.

C) an umbrella liability.

D) personal property floaters.

E) medical payments coverage.

Difficulty: 2 Medium

Topic: Homeowner's insurance policy provisions

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

36) Renter's insurance would include coverage for:

A) flood damage.

B) personal property.

C) house and other structures.

D) umbrella liability.

E) earthquake damage.

Difficulty: 2 Medium

Topic: Renter's insurance

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

37) Which one of the following is not covered by renter's insurance?

A) Financial loss due to damage of personal property

B) Fire damage to the building's roof from faulty wiring

C) Additional living expenses

D) Financial loss due to loss of personal property

E) Personal liability

Difficulty: 2 Medium

Topic: Renter's insurance

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

38) Which form of a homeowner's policy expands coverage to include replacement cost on contents?

A) Comprehensive Form (HO-5)

B) Special Form (HO-3)

C) Condominium Form (HO-6)

D) Tenants Form (HO-4)

E) Country Home Form (HO-7)

Difficulty: 3 Hard

Topic: Types of homeowner's policy forms

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

39) Kelly and Bob Walton recently purchased a new home and desire coverage for all causes of loss or damage except those specially excluded by the policy. They should obtain the ________ form for a homeowner's policy.

A) basic

B) broad

C) special

D) modified coverage

E) condominium

Difficulty: 2 Medium

Topic: Types of homeowner's policy forms

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

40) 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 $400 today. What amount will the insurance company pay?

A) $100

B) $150

C) $200

D) $350

E) $400

Difficulty: 2 Medium

Topic: Homeowner's insurance claims and payments

Learning Objective: 10-04 Analyze factors that influence the amount of coverage and the cost of home insurance.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

41) Which one of the following insurance policy provisions requires the insured to pay for part of the loss if the property is not insured for the specified percentage of replacement value?

A) Personal property floater

B) An endorsement

C) Coinsurance clause

D) Umbrella coverage

E) Assigned risk clause

Difficulty: 2 Medium

Topic: Homeowner's insurance claims and payments

Learning Objective: 10-04 Analyze factors that influence the amount of coverage and the cost of home insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

42) 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 property floater

Difficulty: 2 Medium

Topic: Homeowner's claims settlement methods

Learning Objective: 10-04 Analyze factors that influence the amount of coverage and the cost of home insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

43) Home insurance premiums are affected most directly by:

A) the profits of the insurance company.

B) insurance agents' commission.

C) government regulations that set premiums.

D) processing costs of claims.

E) the number of claims in an area.

Difficulty: 2 Medium

Topic: Homeowner's insurance cost factors

Learning Objective: 10-04 Analyze factors that influence the amount of coverage and the cost of home insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

44) Your home insurance policy has a $500 deductible. If a small fire causes $850 damage to your home, what amount of the claim would the insurance company pay?

A) $250

B) $350

C) $500

D) $850

E) Not able to determine from this information

Explanation: $850 − $500 = $350

Difficulty: 1 Easy

Topic: Homeowner's insurance claims and payments

Learning Objective: 10-04 Analyze factors that influence the amount of coverage and the cost of home insurance.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

45) The purpose of financial responsibility laws is to:

A) reduce auto insurance costs.

B) assist poor drivers in getting insurance coverage.

C) protect the public from physical harm and property damage losses caused by drivers.

D) require uninsured motorists coverage.

E) help drivers with a clean driving record.

Difficulty: 2 Medium

Topic: Auto insurance laws and regulations

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

46) ________ 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 payment

B) Bodily injury liability

C) Uninsured motorists protection

D) No-fault insurance

E) Comprehensive insurance

Difficulty: 1 Easy

Topic: Auto insurance - bodily injury coverages

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

47) The 100 in 100/300/50 refers to:

A) property damage liability coverage.

B) the amount of the deductible.

C) collision coverage.

D) the total coverage for an accident.

E) the limit for bodily injury claims that can be paid to one person.

Difficulty: 2 Medium

Topic: Auto insurance - bodily injury coverages

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

48) Henry Edwards was injured in an accident caused by another driver who did not have insurance. Henry's medical expenses would be covered by:

A) property damage coverage.

B) collision coverage.

C) bodily injury liability.

D) uninsured motorists protection.

E) no-fault coverage.

Difficulty: 2 Medium

Topic: Auto insurance - other coverages

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

49) Which one of the following coverages would pay for healthcare for friends who were injured in your automobile?

A) Medical payments coverage

B) Bodily injury liability

C) Collision

D) Uninsured coverage

E) Underinsured coverage

Difficulty: 1 Easy

Topic: Auto insurance - bodily injury coverages

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

50) 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) Financial responsibility coverage

C) Comprehensive system

D) No-fault insurance

E) Uninsured motorists protection

Difficulty: 2 Medium

Topic: No-fault insurance

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

51) ________ protects you against financial loss when your car damages other vehicles, street signs, or buildings.

A) Bodily injury liability

B) Comprehensive physical damage

C) Property damage liability

D) No-fault insurance

E) Assigned risk coverage

Difficulty: 1 Easy

Topic: Auto insurance - property damage coverages

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

52) The 25 in 50/100/25 refers to ________ coverage.

A) assigned risk

B) bodily injury liability

C) no-fault insurance

D) medical payments

E) property damage liability

Difficulty: 1 Easy

Topic: Auto insurance - property damage coverages

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

53) Which one of the following types of coverage would pay for damage to your automobile in an accident for which you were at fault?

A) Property damage liability

B) Collision

C) Comprehensive physical damage

D) No-fault insurance

E) Assigned risk pool coverage

Difficulty: 1 Easy

Topic: Auto insurance - property damage coverages

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

54) Comprehensive physical damage 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 caused by your car.

Difficulty: 2 Medium

Topic: Auto insurance - property damage coverages

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

55) ________ coverage would pay for damage to your vehicle regardless of fault.

A) Property damage liability

B) Collision

C) Comprehensive physical damage

D) Uninsured motorists protection

E) Assigned risk

Difficulty: 2 Medium

Topic: Auto insurance - property damage coverages

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

56) Thomas Joslin was judged at fault in an automobile accident. Three others were awarded damages of $125,000, $100,000, and $75,000. Thomas has 100/300 bodily injury liability coverage. What amount, if any, would not be covered by his insurance?

A) $125,000

B) $100,000

C) $25,000

D) $10,000

E) None. The total amount would be covered by insurance.

Difficulty: 2 Medium

Topic: Auto insurance claims and payments

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

57) 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

Difficulty: 1 Easy

Topic: Auto insurance cost factors

Learning Objective: 10-06 Evaluate factors that affect the cost of automobile insurance.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

58) Wind damage occurs to your car costing $800 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) $100

B) $200

C) $500

D) $700

E) $800

Difficulty: 2 Medium

Topic: Auto insurance claims and payments

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

59) Which one of the following refers to a category based on the driver's 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) Rating tiers

Difficulty: 1 Easy

Topic: Auto insurance cost factors

Learning Objective: 10-06 Evaluate factors that affect the cost of automobile insurance.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

60) Which one 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

Difficulty: 2 Medium

Topic: Auto insurance cost factors

Learning Objective: 10-06 Evaluate factors that affect the cost of automobile insurance.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

61) An assigned risk pool:

A) exists in every state.

B) reduces medical costs associated with auto accidents.

C) takes unsafe drivers off the road.

D) reduces auto insurance premiums with state regulation.

E) offers premium discounts to safe drivers.

Difficulty: 2 Medium

Topic: Auto insurance cost factors

Learning Objective: 10-06 Evaluate factors that affect the cost of automobile insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

62) A system that requires each insurance company operating in a state to provide coverage to individuals who may have had many expensive claims is referred to as:

A) no-fault insurance.

B) an assigned risk pool.

C) premium discounts.

D) equal opportunity insurance.

E) comprehensive coverage.

Difficulty: 1 Easy

Topic: Auto insurance cost factors

Learning Objective: 10-06 Evaluate factors that affect the cost of automobile insurance.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

63) Tara Guest owns a home in Edmond, Oklahoma. She is worried about a tornado causing damage to her home. The tornado is an example of a:

A) peril.

B) hazard.

C) risk.

D) premium.

E) liability.

Difficulty: 2 Medium

Topic: Insurance terminology

Learning Objective: 10-01 Develop a risk management plan using insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

64) Susan Bize owns a home in Edmond, Oklahoma. She has a coffee maker in the home that has been recalled because it is likely to start fires. The coffee maker is an example of a:

A) peril.

B) hazard.

C) risk.

D) premium.

E) deductible.

Difficulty: 2 Medium

Topic: Insurance terminology

Learning Objective: 10-01 Develop a risk management plan using insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

65) Joan Stone owns a home in Edmond, Oklahoma. She is worried her property might be damaged due to some unforeseen event. This worry about the uncertainty as to a loss is an example of a:

A) peril.

B) hazard.

C) risk.

D) premium.

E) policy.

Difficulty: 2 Medium

Topic: Insurance terminology

Learning Objective: 10-01 Develop a risk management plan using insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

66) Nick Wilson owns a home in Edmond, Oklahoma and pays $795 per year in insurance on the home. The $795 fee is an example of a:

A) peril.

B) hazard.

C) risk.

D) premium.

E) liability.

Difficulty: 2 Medium

Topic: Insurance terminology

Learning Objective: 10-01 Develop a risk management plan using insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

67) Kevin Brown rides his bicycle to work so that he does not have to worry about getting in a car accident. How is Kevin managing his risk?

A) Avoidance

B) Reduction

C) Assumption

D) Shifting

E) Creation

Difficulty: 2 Medium

Topic: Risk management

Learning Objective: 10-01 Develop a risk management plan using insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

68) Larry Foster has bought a car with extra safety features, including front and side airbags and antilock brakes. How is Larry managing his risk?

A) Avoidance

B) Reduction

C) Assumption

D) Shifting

E) Development

Difficulty: 2 Medium

Topic: Risk management

Learning Objective: 10-01 Develop a risk management plan using insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

69) Peter Jacobs has set aside $5,000 in case he has an accident in his 2001 Honda Civic. He does not have collision insurance on this car. How is Peter managing his risk?

A) Avoidance

B) Reduction

C) Assumption

D) Shifting

E) Creation

Difficulty: 2 Medium

Topic: Risk management

Learning Objective: 10-01 Develop a risk management plan using insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

70) Robert Plant pays a premium each month to State Farm Insurance for automobile insurance on his 2014 Dodge Ram pick-up truck. How is Robert managing his risk?

A) Avoidance

B) Reduction

C) Assumption

D) Shifting

E) Assessment

Difficulty: 2 Medium

Topic: Risk management

Learning Objective: 10-01 Develop a risk management plan using insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

71) Zachary Harris owns a home in Elk City. There was a bad thunderstorm and his gazebo was hit by lightning and burned to the ground. What part of his homeowner's insurance policy would cover this loss?

A) House and other structures

B) Additional living expenses

C) Personal property

D) Personal liability

E) Specialized coverage

Difficulty: 2 Medium

Topic: Homeowner's insurance policy provisions

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

72) William Bennett owns a home in Tampa, Florida. There was a fire in his home and he and his family had to move to a hotel until his home could be fixed. What part of his homeowner's insurance policy would cover the cost of the hotel?

A) House and other structures

B) Additional living expenses

C) Personal property

D) Personal liability

E) Specialized coverage

Difficulty: 2 Medium

Topic: Homeowner's insurance policy provisions

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

73) Albert Finney owns a home in Pompano Beach, Florida. His house is broken into and the burglar steals his computer, his big screen TV, his stereo equipment, and his toaster. What part of his homeowner's insurance would cover this loss?

A) House and other structures

B) Additional living expenses

C) Personal property

D) Personal liability

E) Specialized coverage

Difficulty: 2 Medium

Topic: Personal property insurance

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

74) Brett Johnson owns a home in Yukon, Oklahoma. A babysitter he hires breaks her leg when she trips over the dog. What part of his homeowner's insurance would cover this loss?

A) House and other structures

B) Additional living expenses

C) Personal property

D) Personal liability

E) Specialized coverage

Difficulty: 2 Medium

Topic: Homeowner's insurance policy provisions

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

75) Craig Brown owns a home in San Francisco, California. There is a major earthquake and his house is damaged by the earthquake. What type of insurance would he have to have to cover this loss?

A) House and other structures

B) Additional living expenses

C) Personal property

D) Personal liability

E) Specialized coverage

Difficulty: 2 Medium

Topic: Homeowner's insurance endorsements

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

76) David Bowers must show a card from his automobile insurance company when he registers his car in the state of Oklahoma each year to show financial responsibility. Which of the following types of laws is the reason he must show this card each year?

A) Financial responsibility laws

B) Lemon laws

C) Truth in Lending Law

D) Equal Opportunity Law

E) Fiscal responsibility laws

Difficulty: 2 Medium

Topic: Auto insurance laws and regulations

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

77) Evan McWilliams accidentally collided with a car driven by Francis Sullivan. It was Evan's fault and Francis was seriously injured and had to spend the night in the hospital. What part of Evan's automobile insurance policy would cover Francis's injuries?

A) Bodily injury liability

B) Medical payments coverage

C) Property damage liability

D) Collision

E) Comprehensive physical damage

Difficulty: 2 Medium

Topic: Auto insurance - bodily injury coverages

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

78) Ginger Simpson ran off the road and hit a bridge support. She was seriously injured and spent three days in the hospital. What part of Ginger's automobile insurance policy would cover Ginger's injuries?

A) Bodily injury liability

B) Medical payments coverage

C) Property damage liability

D) Collision

E) Comprehensive physical damage

Difficulty: 2 Medium

Topic: Auto insurance - bodily injury coverages

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

79) Helen Granger borrowed her best friend's car and was in an accident. She was at fault. The car was totaled. What part of Helen's automobile insurance policy would cover the damage to her friend's car?

A) Bodily injury liability

B) Medical payments coverage

C) Property damage liability

D) Collision

E) Comprehensive physical damage

Difficulty: 2 Medium

Topic: Auto insurance - property damage coverages

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

80) Georgia Owen was in an accident in which her car was totaled. What part of Georgia's automobile insurance would cover the damage to her car?

A) Bodily injury liability

B) Medical payments coverage

C) Property damage liability

D) Collision

E) Comprehensive physical damage

Difficulty: 2 Medium

Topic: Auto insurance - property damage coverages

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

81) Kyle Burroughs left his car parked on the street all night. When he came out in the morning all four of his tires had been slashed by vandals. What part of Kyle's automobile insurance would cover this damage?

A) Bodily injury liability

B) Medical payments coverage

C) Property damage liability

D) Collision

E) Comprehensive physical damage

Difficulty: 2 Medium

Topic: Auto insurance - property damage coverages

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

82) Which one of the following would be an example of the driver classification category that helps determine insurance rates?

A) John Brown has a 2005 Mazda Miata Convertible.

B) Harry Anderson lives in Boca Raton, Florida.

C) Charlie Purciful is 22 years old.

D) Charlotte Webb has her vehicle in a locked garage.

E) Barry Evans has just moved to Raleigh, North Carolina.

Difficulty: 2 Medium

Topic: Auto insurance cost factors

Learning Objective: 10-06 Evaluate factors that affect the cost of automobile insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

83) Which one of the following would be an example of a rating territory that helps determine insurance rates?

A) Paul Carter drives a 2002 Volkswagen Eurovan.

B) Mary Williams is 73 years old.

C) Kathy Smith lives in Guthrie, Oklahoma.

D) Jeremy Davis is married.

E) John Brown has had three speeding tickets in five years.

Difficulty: 2 Medium

Topic: Auto insurance cost factors

Learning Objective: 10-06 Evaluate factors that affect the cost of automobile insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

84) Which of the following might qualify Amy Farmer for a premium discount on her automobile insurance?

A) Completing a driver's training program

B) Earning straight A's in school

C) Installing an alarm system in her car

D) Participating in a carpool five days a week

E) Any of these might qualify Amy for a discount.

Difficulty: 2 Medium

Topic: Auto insurance cost factors

Learning Objective: 10-06 Evaluate factors that affect the cost of automobile insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

85) Which one of the following would not be considered personal property by a homeowner's insurance policy?

A) Furniture

B) Toaster

C) Tool shed

D) Clothing

E) Microwave

Difficulty: 2 Medium

Topic: Personal property insurance

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

86) Your home insurance policy has a $1,000 deductible. If a windstorm causes $2,500 damage to your home, what amount of the claim would the insurance company pay?

A) $2,500

B) $1,000

C) $1,500

D) $500

E) $0

Explanation: $2,500 − $1,000 = $1,500

Difficulty: 1 Easy

Topic: Homeowner's insurance claims and payments

Learning Objective: 10-04 Analyze factors that influence the amount of coverage and the cost of home insurance.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

87) What type of coverage in a home insurance policy is designed to pay for legal action taken against a homeowner who may be legally responsible for another person's losses or injuries?

A) Business property

B) Liability

C) Floater

D) Comprehensive

E) Personal property

Difficulty: 2 Medium

Topic: Homeowner's insurance policy provisions

Learning Objective: 10-02 Discuss the importance of property and liability insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

88) The 500 in 200/500/50 refers to:

A) property damage liability coverage.

B) the amount of the deductible.

C) collision coverage.

D) the total coverage for an accident.

E) the limit for all bodily injury claims from a single accident.

Difficulty: 2 Medium

Topic: Auto insurance - bodily injury coverages

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

89) Personal risks, property risks, and liability risks are types of ________ risk.

A) speculative

B) avoided

C) assumed

D) pure

E) reduced

Difficulty: 2 Medium

Topic: Types of risk

Learning Objective: 10-01 Develop a risk management plan using insurance.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

90) A parent may be held responsible for the actions of their child if those actions cause financial or physical harm to others. This is known as:

A) negligence.

B) strict liability.

C) vicarious liability.

D) umbrella coverage.

E) self insurance.

Difficulty: 2 Medium

Topic: Insurance terminology

Learning Objective: 10-02 Discuss the importance of property and liability insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

91) Which of the following would not be considered personal property under a typical homeowner's insurance policy?

A) Furniture

B) Firearms

C) House and other structures

D) Jewelry

E) A silverware set

Difficulty: 2 Medium

Topic: Personal property insurance

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

92) ________ coverage protects your automobile from risks such as glass breakage, falling objects, vandalism, or damage caused by hitting an animal.

A) Towing and emergency road service

B) Comprehensive physical damage

C) Collision

D) Wage loss

E) Medical payments

Difficulty: 1 Easy

Topic: Auto insurance - property damage coverages

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

93) Which of the following is not something you should do when you are involved in an automobile accident?

A) Stop your vehicle

B) Turn off the engine

C) Seek medical assistance for anyone with injuries

D) Discuss the accident with anyone around, making sure to admit liability if the accident was your fault

E) Obtain names and contact information of others in the accident and witnesses

Difficulty: 1 Easy

Topic: Auto insurance laws and regulations

Learning Objective: 10-06 Evaluate factors that affect the cost of automobile insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

94) What type of personal liability coverage is also called a personal catastrophe policy?

A) Umbrella policy

B) Personal property floater

C) Coinsurance floater

D) Assigned risk clause

E) Medical payments coverage

Difficulty: 1 Easy

Topic: Umbrella policies

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

95) Personal risks are the uncertainties surrounding the loss of income or life due to all except:

A) professional misconduct.

B) premature death.

C) illness.

D) disability.

E) unemployment.

Difficulty: 1 Easy

Topic: Types of risk

Learning Objective: 10-01 Develop a risk management plan using insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

96) Another term for liability insurance that protects you from claims if a client holds you responsible for errors or you fail to perform as promised is:

A) umbrella policy.

B) personal property floater.

C) errors and omissions.

D) endorsement.

E) self-insurance.

Difficulty: 2 Medium

Topic: Errors and omissions insurance

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

97) Fewer than what percent of people who live in flood-prone areas have flood insurance?

A) 5

B) 15

C) 20

D) 30

E) 50

Difficulty: 2 Medium

Topic: Homeowner's insurance endorsements

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

98) Approximately what percent of people who rent have purchased renter's insurance?

A) 10

B) 20

C) 40

D) 60

E) 75

Explanation: 4 out of 10 = 4 / 10 = 40%

Difficulty: 2 Medium

Topic: Renter's insurance

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

99) Self-insurance is part of:

A) risk avoidance.

B) risk assumption.

C) risk shifting.

D) risk reduction.

E) endorsement.

Difficulty: 2 Medium

Topic: Risk management

Learning Objective: 10-01 Develop a risk management plan using insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

100) Property owners face potential property losses due to two risks, physical damage and:

A) liability.

B) negligence.

C) strict liability.

D) vicarious liability.

E) loss of use.

Difficulty: 2 Medium

Topic: Homeowner's insurance policy provisions

Learning Objective: 10-02 Discuss the importance of property and liability insurance.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

101) Additional personal liability insurance beyond the basic coverage in a homeowner's policy is available with:

A) an umbrella policy.

B) a personal property floater.

C) an endorsement.

D) a coinsurance clause.

E) medical payments coverage.

Difficulty: 2 Medium

Topic: Umbrella policies

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

102) Most insurance policies include deductibles, which are a combination of risk assumption and:

A) risk avoidance.

B) risk reduction.

C) risk shifting.

D) risk creation.

E) risk assessment.

Difficulty: 3 Hard

Topic: Risk management

Learning Objective: 10-01 Develop a risk management plan using insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

103) Which statement is not true about no-fault insurance systems?

A) They are intended to reduce the time and cost associated with the settlement of automobile injury cases.

B) The systems vary from state to state.

C) Some states include property damage in the coverage.

D) Some states set limits on medical expenses, lost wages, and other claim settlements.

E) In recent years, all 50 states had some variation of the system.

Difficulty: 3 Hard

Topic: No-fault insurance

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

104) The most common method of dealing with risk is to:

A) shift the risk.

B) pool the risk.

C) avoid the risk.

D) reduce the risk.

E) assume the risk.

Difficulty: 2 Medium

Topic: Risk management

Learning Objective: 10-01 Develop a risk management plan using insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

105) Which of the following refers to the process of establishing a monetary fund that can be used to cover the cost of a loss?

A) Risk reduction

B) Self-insurance

C) Risk creation

D) Risk avoidance

E) Risk shifting

Difficulty: 1 Easy

Topic: Risk management

Learning Objective: 10-01 Develop a risk management plan using insurance.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

106) Property owners face loss of use risk due to:

A) arson.

B) fire.

C) wind.

D) water.

E) smoke.

Difficulty: 1 Easy

Topic: Personal property insurance

Learning Objective: 10-02 Discuss the importance of property and liability insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

107) Uninsurable risks are considered ________ risk.

A) property

B) liability

C) speculative

D) pure

E) personal

Difficulty: 1 Easy

Topic: Types of risk

Learning Objective: 10-01 Develop a risk management plan using insurance.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

108) Which of the following is a list of personal belongings with purchase dates and cost information?

A) Personal property floater

B) Household inventory

C) Additional living expense

D) Umbrella policy

E) Personal liability policy

Difficulty: 1 Easy

Topic: Personal property insurance

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

109) Which of the following is a risk-sharing firm that agrees to assume financial responsibility for losses that may result from an insured risk?

A) Financial advisor

B) Auto manufacturer

C) Homeowner

D) Policyholder

E) Insurance company

Difficulty: 1 Easy

Topic: Insurance terminology

Learning Objective: 10-01 Develop a risk management plan using insurance.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

110) Which of the following is an insurable risk?

A) Purposeful injury to another

B) Quitting your job because you dislike it

C) Professional misconduct

D) Starting a small business

E) Gambling

Difficulty: 2 Medium

Topic: Types of risk

Learning Objective: 10-01 Develop a risk management plan using insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

111) Risk management is an organized strategy for protecting assets and people and is considered a ________.

A) one month process

B) short-range process

C) medium-range process

D) long-range process

E) non-planning process

Difficulty: 2 Medium

Topic: Risk management

Learning Objective: 10-01 Develop a risk management plan using insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

112) What is the most common and costly natural disaster in the United States?

A) Earthquakes

B) Lightning strikes

C) Floods

D) Fires

E) Thunderstorms

Difficulty: 1 Easy

Topic: Homeowner's insurance endorsements

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

113) Homeowners can obtain $10,000 coverage for sewage and drain backup damage for approximately:

A) $50 to $80 per year.

B) $80 to $100 per year.

C) $100 to $200 per year.

D) $200 to $300 per year.

E) $300 to $400 per year.

Difficulty: 2 Medium

Topic: Homeowner's insurance endorsements

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

114) Jane Smith accidentally hit a utility pole. The cost to repair her car was $2,950, and she has a $500 collision deductible. How much will the insurance company be required to pay for the car repair?

A) $250

B) $500

C) $1,000

D) $2,450

E) $2,950

Explanation: $2,950 − $500 = $2,450

Difficulty: 1 Easy

Topic: Auto insurance - property damage coverages

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

115) Which of the following is not covered by personal property coverage?

A) Your camera taken on vacation

B) Your computer tablet used while at school

C) Your garage

D) Power tool rental

E) Rug shampoo machine rental

Difficulty: 2 Medium

Topic: Personal property insurance

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

116) According to 2015 data, recovering from just one inch of flood water inside your building can cost about:

A) $27,000

B) $40,000

C) $52,000

D) $60,000

E) $75,000

Difficulty: 1 Easy

Topic: Homeowner's insurance endorsements

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

117) The most common foods and drinks that were reported as the most common distractions in auto accidents includes:

A) coffee.

B) hamburgers.

C) jelly doughnuts.

D) soft drinks.

E) All of these

Difficulty: 2 Medium

Topic: Automobile insurance cost factors

Learning Objective: 10-06 Evaluate factors that affect the cost of automobile insurance.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

118) To reduce driving accidents among teens, some parents have installed an in-car monitoring device that records:

A) seat belt use.

B) engine temperature.

C) tire pressure.

D) oil changes.

E) easy turns.

Difficulty: 2 Medium

Topic: Automobile insurance cost factors

Learning Objective: 10-06 Evaluate factors that affect the cost of automobile insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

119) List and describe the four steps in developing a personal insurance program.

STEP 1: SET INSURANCE GOALS

In managing risks, your goals are to minimize personal, property, and liability risks. Your insurance goals should define what to do to cover the basic risks present in your life situation.

Each individual has unique goals. Income, age, family size, lifestyle, experience, and responsibilities influence the goals you set, and the insurance you buy must reflect those goals.

STEP 2: DEVELOP A PLAN TO REACH YOUR GOALS

Planning is a way of taking control of life instead of letting life happen to you. What risks do you face? Which risks can you afford to take without having to back away from your goals? What resources—public programs, personal assets, family, church, or private risk-sharing plans—are available to you?

STEP 3: PUT YOUR PLAN INTO ACTION

As you carry out your plan, obtain financial and personal resources, budget them, and use them to reach risk management goals.

The best risk management plans have flexibility to allow you to respond to changing life situations.

STEP 4: REVIEW YOUR RESULTS

Evaluate your insurance plan periodically, at least every two or three years or whenever your family circumstances change.

Difficulty: 2 Medium

Topic: Risk management; Homeowner's insurance

Learning Objective: 10-01 Develop a risk management plan using insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual

120) What coverages are included in a homeowner's insurance policy?

Difficulty: 2 Medium

Topic: Homeowner's insurance

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual

121) What are the factors that affect the cost of home insurance?

Difficulty: 2 Medium

Topic: Homeowner's insurance cost factors

Learning Objective: 10-04 Analyze factors that influence the amount of coverage and the cost of home insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual

122) What do automobile insurance companies use GPS technology for?

Difficulty: 2 Medium

Topic: Automobile insurance cost factors

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual

123) A friend wants to understand what affects the cost of auto insurance. Explain the main factors used to determine the automobile insurance premiums a person pays.

Difficulty: 2 Medium

Topic: Automobile insurance cost factors

Learning Objective: 10-06 Evaluate factors that affect the cost of automobile insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual

124) Explain the difference between strict and vicarious liability. Provide examples.

Strict liability example: If one unintentionally damages another person's property they might be strictly liable.

Vicarious liability examples: If the behavior of a child causes financial or physical harm to others, the parent may be held responsible; if the activities of an employee cause damage, the employer may be held responsible.

Difficulty: 3 Hard

Topic: Personal property insurance

Learning Objective: 10-02 Discuss the importance of property and liability insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual

125) George and Dr. Martha Cooper rent a condominium in an area known for litigious residents and high cost judgments. George has an extensive stamp collection and Martha has expensive photographic equipment. What kind of insurance would you recommend for a couple in their living situation?

Difficulty: 3 Hard

Topic: Renter's insurance

Learning Objective: 10-03 Explain the insurance coverage and policy types available to homeowners and renters.

Bloom's: Analyze

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual

126) You are backing out of your driveway, late for a meeting. A short mental lapse and BANG...you hit a post at the end of your driveway. The damage seems minor. What questions should you ask when trying to decide whether or not to report the incident to your insurance company?

Difficulty: 2 Medium

Topic: Automobile insurance claims and payments

Learning Objective: 10-06 Evaluate factors that affect the cost of automobile insurance.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual

127) What does the term subrogation mean as it relates to motor vehicle property damage coverage?

Difficulty: 3 Hard

Topic: Automobile insurance claims and payments

Learning Objective: 10-05 Identify the important types of automobile insurance coverage.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual