Question 1

A cash value home insurance policy pays the actual costs of replacing the damaged property.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is not covered in a standard homeowner's policy?

Accepted Answer

A) Lightening hits your house and it burns to the ground 
B) Your house is broken into and all the furniture is stolen 
C) The river you live near overflows its bank and washes your house away 
D) Hailstorm damages the roof of your house 
A) Lightening hits your house and it burns to the ground 
B) Your house is broken into and all the furniture is stolen 
C) The river you live near overflows its bank and washes your house away 
D) Hailstorm damages the roof of your house

Question 3

Younger drivers,especially males,between the ages of 16 and 25 are more likely to get in accidents,and therefore pay higher insurance premiums.

Accepted Answer

A) True 
 B)False

Question 4

Automobile insurance rates have risen recently in part due to fraud.Some common forms of fraud include faking

Accepted Answer

A) an accident or injury. 
B) a person's name or relationship to the injured person. 
C) ownership of a car. 
D) All of the above. 
A) an accident or injury. 
B) a person's name or relationship to the injured person. 
C) ownership of a car. 
D) All of the above.

Question 5

Most states have financial responsibility laws that require individuals who drive cars to purchase a minimum amount of liability insurance.

Accepted Answer

A) True 
 B)False

Question 6

A deductible of $300 requires

Accepted Answer

A) the insurance company to pay the first $300 at 100 percent of damages. 
B) you to pay the first $300 of damages. 
C) the insurance company to pay the first $300 at 80 percent of damages. 
D) the insurance company of the party at fault to pay. 
A) the insurance company to pay the first $300 at 100 percent of damages. 
B) you to pay the first $300 of damages. 
C) the insurance company to pay the first $300 at 80 percent of damages. 
D) the insurance company of the party at fault to pay.

Question 7

In general,insurance companies generate their revenue from receiving payments for policies and from earning a return from investing the proceeds until the funds are needed to cover claims.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) An automobile 
B) A garage 
C) Furniture 
D) Trees and shrubs 
A) An automobile 
B) A garage 
C) Furniture 
D) Trees and shrubs

Question 9

The deductible is the amount of damage that you are responsible for paying on your car before any coverage is provided by the insurance company.

Accepted Answer

A) True 
 B)False

Question 10

If you have good health insurance,you should probably not take out medical payments coverage on your automobile policy.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following features on your car will not result in lower premiums?

Accepted Answer

A) Anti-lock brakes 
B) Mercury vapor headlights 
C) Air bags 
D) All of the above will reduce your premiums. 
A) Anti-lock brakes 
B) Mercury vapor headlights 
C) Air bags 
D) All of the above will reduce your premiums.

Question 12

A deductible is an amount

Accepted Answer

A) the person at fault will pay. 
B) not paid by the insurance company. 
C) if increased will increase the premium. 
D) mandated by state law. 
A) the person at fault will pay. 
B) not paid by the insurance company. 
C) if increased will increase the premium. 
D) mandated by state law.

Question 13

Insurance is not a good option for managing risk when

Accepted Answer

A) the probability of loss is very small. 
B) the benefits outweigh the costs. 
C) you want to protect your existing and future net worth. 
D) there is a likelihood that an event will cause a large financial loss. 
A) the probability of loss is very small. 
B) the benefits outweigh the costs. 
C) you want to protect your existing and future net worth. 
D) there is a likelihood that an event will cause a large financial loss.

Question 14

In general,insurance companies generate their revenues from

Accepted Answer

A) receiving payments for policies. 
B) investing the proceeds of premiums until the funds are needed to cover losses. 
C) Both A and B are correct. 
D) the increases in value of their corporate stock. 
A) receiving payments for policies. 
B) investing the proceeds of premiums until the funds are needed to cover losses. 
C) Both A and B are correct. 
D) the increases in value of their corporate stock.

Question 15

Your car collides with a vehicle that has just run a red light,and your policy limits are 200/300/100.What is the maximum coverage under your policy for damages to the vehicle that you struck?
(a)$200,000
(b)$300,000
(c)$100,000
(d)Zero

Accepted Answer

(d)Since the other driver was

Question 16

To cover additional personal property not adequately covered by your homeowner's policy,you should take out a(n)________ policy.

Accepted Answer

A) personal liability 
B) personal articles floater 
C) extra value 
D) umbrella 
A) personal liability 
B) personal articles floater 
C) extra value 
D) umbrella

Question 17

The first step in the risk management process is to insure against risk.

Accepted Answer

A) True 
 B)False

Question 18

The most popular forms of insurance for individuals are property and casualty,life insurance,and health insurance.

Accepted Answer

A) True 
 B)False

Question 19

Independent insurance agents are those that work for one particular company.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) Medical expenses for injuries to visitors 
B) Replacement of personal items such as clothing 
C) Fire damage to the building's roof 
D) Cost of legal action due to personal liability claims 
A) Medical expenses for injuries to visitors 
B) Replacement of personal items such as clothing 
C) Fire damage to the building's roof 
D) Cost of legal action due to personal liability claims

Exam 11: Auto and Homeowners Insurance

A cash value home insurance policy pays the actual costs of replacing the damaged property.

Which of the following is not covered in a standard homeowner's policy?

Younger drivers,especially males,between the ages of 16 and 25 are more likely to get in accidents,and therefore pay higher insurance premiums.

Automobile insurance rates have risen recently in part due to fraud.Some common forms of fraud include faking

Most states have financial responsibility laws that require individuals who drive cars to purchase a minimum amount of liability insurance.

A deductible of $300 requires

In general,insurance companies generate their revenue from receiving payments for policies and from earning a return from investing the proceeds until the funds are needed to cover claims.

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

The deductible is the amount of damage that you are responsible for paying on your car before any coverage is provided by the insurance company.

If you have good health insurance,you should probably not take out medical payments coverage on your automobile policy.

Which of the following features on your car will not result in lower premiums?

A deductible is an amount

Insurance is not a good option for managing risk when

In general,insurance companies generate their revenues from

Your car collides with a vehicle that has just run a red light,and your policy limits are 200/300/100.What is the maximum coverage under your policy for damages to the vehicle that you struck? (a)$200,000 (b)$300,000 (c)$100,000 (d)Zero

To cover additional personal property not adequately covered by your homeowner's policy,you should take out a(n)________ policy.

The first step in the risk management process is to insure against risk.

The most popular forms of insurance for individuals are property and casualty,life insurance,and health insurance.

Independent insurance agents are those that work for one particular company.

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

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

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