Question 1

Before you increase your homeowner's insurance deductible you should evaluate

Accepted Answer

A)  if you are going to have a claim in the next year or two. 
B)  if you can afford to "self insure" the deductible amount in the event of a loss claim. 
C)  your auto insurance liability levels and liability deductible. 
D)  Stop; it is never a good idea to increase your deductible. 
A)  if you are going to have a claim in the next year or two. 
B)  if you can afford to "self insure" the deductible amount in the event of a loss claim. 
C)  your auto insurance liability levels and liability deductible. 
D)  Stop; it is never a good idea to increase your deductible.

Question 2

Which of the following statements regarding auto insurance is not true?

Accepted Answer

A)  No-fault insurance programs do not hold a specific driver liable for causing an accident. 
B)  Exaggerated personal injury claims result in additional insurance expenses of about $100 million per year. 
C)  One reason for high auto insurance premiums is auto insurance fraud. 
D)  If you drive a car, you need to have auto insurance. 
A)  No-fault insurance programs do not hold a specific driver liable for causing an accident. 
B)  Exaggerated personal injury claims result in additional insurance expenses of about $100 million per year. 
C)  One reason for high auto insurance premiums is auto insurance fraud. 
D)  If you drive a car, you need to have auto insurance.

Question 3

Once drivers are labeled as "high risk," they will not be able to get automobile insurance at any price.

Accepted Answer

A) True 
 B)False

Question 4

Of the following statements,which is not true regarding no-fault insurance?

Accepted Answer

A)  Not all states have no-fault insurance. 
B)  It helps determine which driver is at fault and which has no fault. 
C)  It is intended to avoid costly legal battles. 
D)  It does not prevent insurance fraud. 
A)  Not all states have no-fault insurance. 
B)  It helps determine which driver is at fault and which has no fault. 
C)  It is intended to avoid costly legal battles. 
D)  It does not prevent insurance fraud.

Question 5

Since insurance is a regulated industry,the rates for automobile policies are relatively the same among different companies operating in a state.

Accepted Answer

A) True 
 B)False

Question 6

Insurance is not a good option for managing risk when

Accepted Answer

A)  the probability of loss is very small and the expected loss is 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 and the expected loss is 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 7

Which of the following is covered by renter's insurance?

Accepted Answer

A)  Damage to a stove that the landlord purchased before you moved in. 
B)  Your dog bites the tenant who lives across the hall from you. 
C)  A collapsed roof. 
D)  Stereo system stolen from the car you are leasing. 
A)  Damage to a stove that the landlord purchased before you moved in. 
B)  Your dog bites the tenant who lives across the hall from you. 
C)  A collapsed roof. 
D)  Stereo system stolen from the car you are leasing.

Question 8

A personal scheduled property floater should be added to your homeowner's insurance policy if

Accepted Answer

A)  you or your spouse has expensive jewelry or watches 
B)  you have valuable original art in your home 
C)  you own an antique car and keep it in your garage 
D)  Both A and B are correct 
A)  you or your spouse has expensive jewelry or watches 
B)  you have valuable original art in your home 
C)  you own an antique car and keep it in your garage 
D)  Both A and B are correct

Question 9

You can use the Internet to obtain

Accepted Answer

A)  estimates on auto insurance rates. 
B)  new car prices. 
C)  blue book values on used vehicles. 
D)  All of the above. 
A)  estimates on auto insurance rates. 
B)  new car prices. 
C)  blue book values on used vehicles. 
D)  All of the above.

Question 10

Under a cash value policy,the loss of a $600 item with an estimated life of five years that was purchased three years ago and has a replacement cost of $900 would result in a payment from the insurance company of

Accepted Answer

A)  $600. 
B)  $900. 
C)  $240. 
D)  $360. 
A)  $600. 
B)  $900. 
C)  $240. 
D)  $360.

Question 11

A common form of auto insurance fraud is

Accepted Answer

A)  faking an accident or injury. 
B)  stealing merchandise from a car. 
C)  driving without a valid license. 
D)  None of the above. 
A)  faking an accident or injury. 
B)  stealing merchandise from a car. 
C)  driving without a valid license. 
D)  None of the above.

Question 12

Which of the following is not true regarding medical payments coverage?

Accepted Answer

A)  It covers both family and nonfamily members. 
B)  It is not recommended or needed if you have health insurance. 
C)  It may even cover funeral expenses. 
D)  Insurance professionals recommend coverage of about $10,000 per person. 
A)  It covers both family and nonfamily members. 
B)  It is not recommended or needed if you have health insurance. 
C)  It may even cover funeral expenses. 
D)  Insurance professionals recommend coverage of about $10,000 per person.

Question 13

It is possible that some of the expenses you incurred in an accident are not covered by your policy.

Accepted Answer

A) True 
 B)False

Question 14

Your home insurance provides for replacement value for personal property losses.Your china hutch was vandalized and completely destroyed.Your hutch cost $400 four years ago,but a new one will cost you $600.How much will the insurance company pay?

Accepted Answer

A)  $400 
B)  $200 
C)  $600 
D)  Nothing, vandalism is not covered. 
A)  $400 
B)  $200 
C)  $600 
D)  Nothing, vandalism is not covered.

Question 15

You are in an auto accident with someone who does not have insurance.You should do all of the following except

Accepted Answer

A)  take pictures. 
B)  call the police. 
C)  file a claim. 
D)  try to settle the claim without involving the police or your insurance company. 
A)  take pictures. 
B)  call the police. 
C)  file a claim. 
D)  try to settle the claim without involving the police or your insurance company.

Question 16

Use the following two columns of items to answer the matching questions below:
-collision coverage

Accepted Answer

A) requires individuals who drive cars to purchase a minimum amount of liability insurance 
B) pays for injuries to you or people in your car in an accident where you (the driver) are at fault 
C) a set dollar amount that you are responsible for paying before any coverage is provided by your insurer 
D) covers damage to your car as a result of theft, fire, vandalism, or various other events 
E) vehicle insurance to cover various injuries, your property, and the property of others
F)covers damage to your car when you are at fault in an accident 
A) requires individuals who drive cars to purchase a minimum amount of liability insurance 
B) pays for injuries to you or people in your car in an accident where you (the driver) are at fault 
C) a set dollar amount that you are responsible for paying before any coverage is provided by your insurer 
D) covers damage to your car as a result of theft, fire, vandalism, or various other events 
E) vehicle insurance to cover various injuries, your property, and the property of others
F)covers damage to your car when you are at fault in an accident

Question 17

A replacement cost rider is important to add to your homeowner's policy because

Accepted Answer

A)  it replaces property that breaks or otherwise stops working. 
B)  in the event of a loss, your property is valued at the cost of replacement regardless of age or depreciation. 
C)  it will pay you depreciated value plus inflation for your property loss. 
D)  it is not important and is an expensive but low value rider. 
A)  it replaces property that breaks or otherwise stops working. 
B)  in the event of a loss, your property is valued at the cost of replacement regardless of age or depreciation. 
C)  it will pay you depreciated value plus inflation for your property loss. 
D)  it is not important and is an expensive but low value rider.

Question 18

Which of the following is true of renter's insurance?

Accepted Answer

A)  You only need to buy it if you have possessions of considerable value. 
B)  It will not cover your liability if a picture falls off the wall and injures a guest in your apartment. 
C)  Your renter's insurance covers only your own property, not the property of your landlord. 
D)  Because premiums are small, most people who need it have renter's insurance. 
A)  You only need to buy it if you have possessions of considerable value. 
B)  It will not cover your liability if a picture falls off the wall and injures a guest in your apartment. 
C)  Your renter's insurance covers only your own property, not the property of your landlord. 
D)  Because premiums are small, most people who need it have renter's insurance.

Question 19

Given the large number of uninsured drivers,uninsured motorist coverage is needed.

Accepted Answer

A) True 
 B)False

Question 20

List four ways to reduce your auto insurance premiums.

Accepted Answer

Any four of the following:
∙ Buy a less

Exam 11: Auto and Homeowners Insurance

Before you increase your homeowner's insurance deductible you should evaluate

Which of the following statements regarding auto insurance is not true?

Once drivers are labeled as "high risk," they will not be able to get automobile insurance at any price.

Of the following statements,which is not true regarding no-fault insurance?

Since insurance is a regulated industry,the rates for automobile policies are relatively the same among different companies operating in a state.

Insurance is not a good option for managing risk when

Which of the following is covered by renter's insurance?

A personal scheduled property floater should be added to your homeowner's insurance policy if

You can use the Internet to obtain

Under a cash value policy,the loss of a $600 item with an estimated life of five years that was purchased three years ago and has a replacement cost of $900 would result in a payment from the insurance company of

A common form of auto insurance fraud is

Which of the following is not true regarding medical payments coverage?

It is possible that some of the expenses you incurred in an accident are not covered by your policy.

Your home insurance provides for replacement value for personal property losses.Your china hutch was vandalized and completely destroyed.Your hutch cost $400 four years ago,but a new one will cost you $600.How much will the insurance company pay?

You are in an auto accident with someone who does not have insurance.You should do all of the following except

Use the following two columns of items to answer the matching questions below: -collision coverage

A replacement cost rider is important to add to your homeowner's policy because

Which of the following is true of renter's insurance?

Given the large number of uninsured drivers,uninsured motorist coverage is needed.

List four ways to reduce your auto insurance premiums.

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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