Personal Finance Chapter 10

Homeowner’s co-insurance requires the insured to carry insurance protection equal to the market value of the house. False
Earthquakes are covered under most homeowner’s insurance policies. False
A house with a replacement value of $110,000 is currently insured for $90,000. The house is damaged in a windstorm, causing a loss of $15,000. The insurance company will pay an amount equal to $15,000 less the deductible. True
Increasing the amount of the deductible is the only way to bring down the cost of homeowner’s insurance. False
Suppose you carelessly, but unintentionally, knocked someone down a flight of stairs in your home. You would be covered by your homeowner’s insurance. True
The premiums for homeowners’ insurance policies are based on the size of the deductible, any policy limits, and the standard coverage. True
Uninsured motorists protection usually provides protection to the insured’s car if a hit-and-run incident occurs. False
A personal property floater and a personal liability umbrella policy offer similar coverage. False
The federal government has introduced a subsidized flood insurance program for homeowners and tenants living in designated communities. True
Never discuss liability at the scene of an accident, or with anyone other than the police and the insurance company. True
A captive agent typically represents two to ten different insurance companies. False
Insurance policies provide the opportunity for claims arbitration to settle any disputed liability claims. True
Negligence occurs when someone: fails to act in a reasonable manner
The principle of indemnity will prevent: an insured from collecting more than what he or she has lost.
A liability suit could result against you if: your dog bites your neighbor
Which of the following homeowners’ policies provides coverage for the damage caused by the accidental discharge of water or steam? HO-2
Which of the following is a basic, seldom-used homeowner’s policy with very narrow coverage? HO-1
Section I of a homeowner’s insurance policy covers: hospitalization cost provided to the insured
Section II of a homeowner’s insurance contract covers: the cost of defending the insured.
A higher home insurance cost may result from: Low credit scores of the insured
Replacement-cost coverage is the reimbursement of: the cost of repairing or replacing damaged structures without deducting physical depreciation.
A homeowner’s policy does not provide protection for: the personal property of tenants.
Donna, who is single and 30 years old, received several speeding tickets recently and was shocked by the effect they had on her auto insurance. Donna drives a 2002 Pontiac Firebird. She is currently not covered by health insurance, has an emergency fund of $25,000, an income of $100,000 per year, and an investment portfolio of $230,000. She is trying to reduce the price of her auto insurance. Which of the following actions is most likely to help Donna reduce the price of her auto insurance? Raising her deductible from $250 to $1,000
Auto insurance is needed primarily: as protection against potential liability claims
The liability coverage under a personal automobile policy is provided to: the insured for damage.

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