Question 1

You are in an accident and it's the other driver's fault but he is not insured.There is no type of coverage to protect you from financial loss in this case.

Accepted Answer

A) True 
 B)False

Question 2

You have cash value coverage for your personal property on your homeowner's policy.A camera that cost you $300 eight years ago had a life expectancy of 10 years.The camera was stolen,and a new one will cost only $200.How much will the insurance company pay?

Accepted Answer

A)  $60 
B)  $100 
C)  $200 
D)  $300 
A)  $60 
B)  $100 
C)  $200 
D)  $300

Question 3

To cover valuable 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 4

Having a large deductible on your auto or homeowner's insurance is a form of

Accepted Answer

A)  managing risk. 
B)  self-insuring risk. 
C)  financial decision-making. 
D)  A, B and C are all correct. 
A)  managing risk. 
B)  self-insuring risk. 
C)  financial decision-making. 
D)  A, B and C are all correct.

Question 5

Legal expenses incurred by an insurance company when defending you against a lawsuit are deducted from the limits of your liability coverage.

Accepted Answer

A) True 
 B)False

Question 6

One of the problems with no-fault automobile insurance is that it

Accepted Answer

A)  results in higher court costs. 
B)  results in higher jury awards to victims. 
C)  doesn't penalize drivers who cause accidents to the degree that they should be. 
D)  hasn't resulted in lower costs to insurance companies or lower auto insurance premiums. 
A)  results in higher court costs. 
B)  results in higher jury awards to victims. 
C)  doesn't penalize drivers who cause accidents to the degree that they should be. 
D)  hasn't resulted in lower costs to insurance companies or lower auto insurance premiums.

Question 7

Insurance agents who work for one particular company are called

Accepted Answer

A)  company agents. 
B)  captive agents. 
C)  independent agents. 
D)  freelance agents. 
A)  company agents. 
B)  captive agents. 
C)  independent agents. 
D)  freelance agents.

Question 8

What three insurance components do automobile and homeowner's policies usually have in common?

Accepted Answer

Liability,

Question 9

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 10

Collision coverage is normally limited to the car itself and not to items that were damaged while in the car.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Your home insurance policy has a $250 deductible.If a small fire causes $600 damage to your home,what amount of the claim would the insurance company pay?

Accepted Answer

A)  $250 
B)  $350 
C)  $450 
D)  $600 
A)  $250 
B)  $350 
C)  $450 
D)  $600

Question 13

Which of the following may be a reason why an insurance company decides not to renew your policy?

Accepted Answer

A)  You caused an accident as a result of drunk driving. 
B)  You did not take the driving training course offered by your insurance company. 
C)  Your driver's license was suspended. 
D)  Both A and C are correct 
A)  You caused an accident as a result of drunk driving. 
B)  You did not take the driving training course offered by your insurance company. 
C)  Your driver's license was suspended. 
D)  Both A and C are correct

Question 14

Which of the following would be considered the most high-risk driver?

Accepted Answer

A)  Nineteen year old female 
B)  Nineteen year old male 
C)  Twenty-eight year old female 
D)  Twenty-eight year old male 
A)  Nineteen year old female 
B)  Nineteen year old male 
C)  Twenty-eight year old female 
D)  Twenty-eight year old male

Question 15

If you have a poor driving record,you may be forced to do all of the following except

Accepted Answer

A)  accept the premium of any insurance company willing to insure you. 
B)  prove over several years that you have improved your driving habits. 
C)  refrain from filing a claim until your driving record has improved. 
D)  pay higher insurance premiums. 
A)  accept the premium of any insurance company willing to insure you. 
B)  prove over several years that you have improved your driving habits. 
C)  refrain from filing a claim until your driving record has improved. 
D)  pay higher insurance premiums.

Question 16

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?

Accepted Answer

A)  $200,000 
B)  $300,000 
C)  $100,000 
D)  zero 
A)  $200,000 
B)  $300,000 
C)  $100,000 
D)  zero

Question 17

Lessening your exposure to an illness by getting periodic health checkups is an example of

Accepted Answer

A)  avoiding risks. 
B)  reducing risks. 
C)  accepting risks. 
D)  transferring risks. 
A)  avoiding risks. 
B)  reducing risks. 
C)  accepting risks. 
D)  transferring risks.

Question 18

Auto insurance discounts might be given for all of the following,except

Accepted Answer

A)  antilock brakes. 
B)  alarms. 
C)  leather seats. 
D)  airbags. 
A)  antilock brakes. 
B)  alarms. 
C)  leather seats. 
D)  airbags.

Question 19

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

Question 20

The decision to obtain insurance should be determined by weighing its costs and benefits.

Accepted Answer

A) True 
 B)False

Exam 11: Auto and Homeowners Insurance

You are in an accident and it's the other driver's fault but he is not insured.There is no type of coverage to protect you from financial loss in this case.

You have cash value coverage for your personal property on your homeowner's policy.A camera that cost you $300 eight years ago had a life expectancy of 10 years.The camera was stolen,and a new one will cost only $200.How much will the insurance company pay?

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

Having a large deductible on your auto or homeowner's insurance is a form of

Legal expenses incurred by an insurance company when defending you against a lawsuit are deducted from the limits of your liability coverage.

One of the problems with no-fault automobile insurance is that it

Insurance agents who work for one particular company are called

What three insurance components do automobile and homeowner's policies usually have in common?

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

Collision coverage is normally limited to the car itself and not to items that were damaged while in the car.

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

Your home insurance policy has a $250 deductible.If a small fire causes $600 damage to your home,what amount of the claim would the insurance company pay?

Which of the following may be a reason why an insurance company decides not to renew your policy?

Which of the following would be considered the most high-risk driver?

If you have a poor driving record,you may be forced to do all of the following except

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?

Lessening your exposure to an illness by getting periodic health checkups is an example of

Auto insurance discounts might be given for all of the following,except

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

The decision to obtain insurance should be determined by weighing its costs and benefits.

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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