Personal Finance: Chapter 10 Exam

which of the following homeowners’ policies provides coverage for damage caused by electrical current? HO-2
The first step in buying property and liability insurance is to develop a inventory of exposures to loss
A liability suit could result against you if your dog bites your neighbor
An insured does not get the right to arbitration when the insurance company denies responsibility for the loss
a personal liability umbrella policy typically includes coverage for auto-related liability losses in excess of the limits purchased in the automobile insurance
Replacement-cost coverage is the reimbursement of: the cost of repairing or replacing damaged structures without deduction physical depreciation
the _____ is a good homeowner’s policy for a condominium owner HO-6
A personal liability umbrella policy is designed to supplement homeowner’s insurance coverage
Section II of a homeowner’s insurance contract covers: the cost of defending the insured
When insuring property, people need to consider not only replacing and restoring the actual property in the event of a loss, but also the liability arising from the insured’s responsibility for property loss
Which of the following is true of companies that sell insurance directly to consumers? Their premiums are lower than for companies that sell insurance through agents
An insurance company assigns more complex loss cases to a claims adjustor
Which of the following homeowners’ policies is best suited to a renter of an apartment? HO-4
Negligence occurs when someone fails to act in a reasonable manner
Even though homeowners are eligible for reimbursement on a full replacement-cost basis if they keep their homes insured for at least 80 percent of the amount that it would cost to build them today, _________ can cause the actual amount of coverage to fall below 80 percent inflation
The principle of indemnity will prevent an insured from collecting more than what he or she has lost
Homeowners are eligible for reimbursement on a full replacement-cost basis only if they keep their homes insured for at least _______ of the amount that it would cost to build them today. 80 percent
Comprehensive automobile coverage refers to: coverage for damage to an insured automobile from perils other than collision
Which of the following homeowners’ policies provides coverage caused by the accidental discharge of water? HO-2
A factor that is likely to have the greatest effect on the cost of automobile insurance is the owner’s driving record
A captive agent is an insurance agent who represents only one insurance company
It pays to comparison shop for insurance policies because of the large variations in premiums and services
Which of the following is a basic, seldom-used homeowner’s policy with very narrow coverage? HO-1
A personal liability umbrella policy is more likely to be opted for by people with high incomes and high net worth
A higher home insurance cost may result from a low credit score of the insured
to purchase a personal liability umbrella policy, the insured party must already have relatively high liability limits on their homeowner’s and auto coverage
An increase in the amount of the deductible will decrease the amount of insurance premiums
Section I of a homeowner’s insurance policy covers the dwelling, accompanying structure, and personal property of the insured
the best way to buy automobile insurance is through an insurance agent
standard homeowner’s policies will not include coverage for damage done by flood
The personal property floater provides either blanket or scheduled coverage of items that are not covered adequately in a standard homeowner’s policy.
the liability coverage under a personal automobile policy is provided to the non family members involved in the accident
A homeowner’s policy does not provide protection for the personal property of tenants

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