Question 1

Computers and other equipment used in a home-based business are not usually covered by a home insurance policy.

Accepted Answer

A) True 
 B)False

Question 2

Barbara left a skateboard on her front steps. Her neighbor tripped on the skateboard and was injured. The fact that Barbara didn't put away the skateboard is called

Accepted Answer

A)  Hazard. 
B)  Negligence. 
C)  Peril. 
D)  Premium. 
E)  Risk.

Question 3

An example of a peril is a robbery.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is correct?

Accepted Answer

A)  The best risk management plan is one that does not change throughout one's life. 
B)  Once a plan is set up, it should be reviewed every 10 years. 
C)  A solid risk management plan works well without insurance as a component. 
D)  One question that should be asked when developing a risk management plan is "What do I need to insure?" 
E)  The main goal of insurance should be to maximize personal, property, and liability risks.

Question 5

An individual who purchases an insurance policy is called

Accepted Answer

A)  The insurance company. 
B)  A policyholder. 
C)  An insurer. 
D)  A victim. 
E)  An employer.

Question 6

Angela should decrease her deductible from $1,000 to $250 in order to reduce her home insurance premium.

Accepted Answer

A) True 
 B)False

Question 7

When Stanley was visiting Elaine, he tripped on her front porch step and sprained his ankle. His injuries were covered by

Accepted Answer

A)  Elaine's medical payments coverage. 
B)  Stanley homeowner's policy. 
C)  Elaine's health insurance coverage. 
D)  Elaine's life insurance policy. 
E)  The insurance policy of the mason who installed the front porch step 15 years ago.

Question 8

Timothy was driving his friend Nick to football practice. While driving, he was hit by a driver who had coverage of 100/300/50. Tim and Nick each suffered some physical injuries. Based on this information, which of the following is correct?

Accepted Answer

A)  Timothy's injuries would be covered to $100 and property damage would be limited to $300. 
B)  Nick's injuries would be covered to $50,000. 
C)  Individually, Timothy and Nick's injuries would be covered to $300,000 each. 
D)  The total coverage for Timothy and Nick would be $100,000, and the driver who caused the accident would be covered to $50,000. 
E)  The policy would provide a maximum of $100,000 for each person who was injured, and no more than $300,000 for total injuries of all parties in the accident.

Question 9

The first step in developing a personal insurance program is to set insurance goals.

Accepted Answer

A) True 
 B)False

Question 10

Risk avoidance is an organized plan for protecting yourself, your family, and your property.

Accepted Answer

A) True 
 B)False

Question 11

If you drive a model of vehicle that is frequently stolen, you will probably pay a higher premium for your auto insurance.

Accepted Answer

A) True 
 B)False

Question 12

Sandra is contacting several insurance companies to compare coverage for her home. Which of the following should NOT affect her premium?

Accepted Answer

A)  Alarm system 
B)  Amount of coverage 
C)  Type of structure 
D)  Deductible 
E)  The location of your employer.

Question 13

Barbara left a skateboard on her front steps. A windstorm swept the skateboard up and through her window. The windstorm was a

Accepted Answer

A)  Hazard. 
B)  Negligence. 
C)  Peril. 
D)  Premium. 
E)  Risk.

Question 14

If you choose to insure your home or your vehicle, you are using

Accepted Answer

A)  Risk avoidance. 
B)  Risk reduction. 
C)  Risk assumption. 
D)  Risk shifting. 
E)  Risk increasing.

Question 15

Insurance is protection against possible financial loss.

Accepted Answer

A) True 
 B)False

Question 16

Cheyenne has a home insured for $300,000. It would cost $320,000 to rebuild her home. If she has home insurance that provides personal property coverage at 70% of value, how much of her household belongings would be covered?

Accepted Answer

A)  $120,000 
B)  $210,000 
C)  $224,000 
D)  $300,000 
E)  $320,000

Question 17

An insurance company will

Accepted Answer

A)  Insure speculative and pure risks. 
B)  Insure pure risk, but not speculative risk. 
C)  Insure neither pure risk nor speculative risk. 
D)  Insure speculative risk, but not pure risk. 
E)  Insure all types of risks.

Question 18

Barbara left a skateboard on her front steps. Her neighbor tripped on the skateboard and was injured. The skateboard was a

Accepted Answer

A)  Hazard. 
B)  Negligence. 
C)  Peril. 
D)  Premium. 
E)  Risk.

Question 19

The National Flood Insurance Program makes flood and earthquake insurance available for all homeowners.

Accepted Answer

A) True 
 B)False

Question 20

If you choose to avoid the risk of a traffic accident by not driving to work, you are using

Accepted Answer

A)  Risk avoidance. 
B)  Risk reduction. 
C)  Risk assumption. 
D)  Risk shifting. 
E)  Risk increasing.

Exam 8: Home and Automobile Insurance

Computers and other equipment used in a home-based business are not usually covered by a home insurance policy.

Barbara left a skateboard on her front steps. Her neighbor tripped on the skateboard and was injured. The fact that Barbara didn't put away the skateboard is called

An example of a peril is a robbery.

Which of the following is correct?

An individual who purchases an insurance policy is called

Angela should decrease her deductible from $1,000 to $250 in order to reduce her home insurance premium.

When Stanley was visiting Elaine, he tripped on her front porch step and sprained his ankle. His injuries were covered by

Timothy was driving his friend Nick to football practice. While driving, he was hit by a driver who had coverage of 100/300/50. Tim and Nick each suffered some physical injuries. Based on this information, which of the following is correct?

The first step in developing a personal insurance program is to set insurance goals.

Risk avoidance is an organized plan for protecting yourself, your family, and your property.

If you drive a model of vehicle that is frequently stolen, you will probably pay a higher premium for your auto insurance.

Sandra is contacting several insurance companies to compare coverage for her home. Which of the following should NOT affect her premium?

Barbara left a skateboard on her front steps. A windstorm swept the skateboard up and through her window. The windstorm was a

If you choose to insure your home or your vehicle, you are using

Insurance is protection against possible financial loss.

Cheyenne has a home insured for $300,000. It would cost $320,000 to rebuild her home. If she has home insurance that provides personal property coverage at 70% of value, how much of her household belongings would be covered?

An insurance company will

Barbara left a skateboard on her front steps. Her neighbor tripped on the skateboard and was injured. The skateboard was a

The National Flood Insurance Program makes flood and earthquake insurance available for all homeowners.

If you choose to avoid the risk of a traffic accident by not driving to work, you are using