Chapter 10 – Property and Motor Vehicle Insurance
1. (p. 317) The purpose of insurance is to help protect you and your family against financial
hardship due to hazard, accident, death, and similar risks.
2. (p. 318) Risk management is an organized strategy for protecting and conserving assets and
people.
Chapter 10 – Property and Motor Vehicle Insurance
3. (p. 319) The most common method of dealing with risk is to shift, or transfer it to an insurance
company or some other organization.
4. (p. 319) Self-insurance is the process of establishing a monetary fund that can be used to cover
the cost of a loss.
5. (p. 323) Property losses can be categorized into destruction of property, and losses due to
robbery, burglary, vandalism, or arson.
6. (p. 324) Homeowner’s insurance refers to coverage also available to condominium owners.
Chapter 10 – Property and Motor Vehicle Insurance
7. (p. 325) Personal belongings that have a high value require coverage with a personal property
floater.
8. (p. 325) The purpose of a household inventory is to provide evidence of items covered by
home insurance.
9. (p. 326) Increased liability insurance is available with an umbrella policy.
10. (p. 327) Medical payments coverage in a home insurance policy is designed to pay for legal
action taken against a homeowner who may be legally responsible for injury or property
damage of others.
Chapter 10 – Property and Motor Vehicle Insurance
11. (p. 328) The comprehensive form of homeowner’s insurance includes coverage for damage
due to floods.
12. (p. 330) Replacement cost for settling property insurance claims is less costly than the actual
cash value method.
13. (p. 331) A home made of wood is more expensive to insure than a comparable brick
structure.
14. (p. 334) The 100/300 amounts for bodily injury liability insurance refer to the costs of
insurance coverage.
Chapter 10 – Property and Motor Vehicle Insurance
15. (p. 334) Medical payments automobile insurance coverage pays for the costs of injuries to
persons in the driver’s vehicle.
16. (p. 335) No-fault insurance systems have consistently reduced the time and costs involved in
settling claims.
17. (p. 335) Property damage liability coverage would pay for damage to another vehicle for
which you were at fault.
18. (p. 338) The driver classification category is based on automobile style, model, and value of
the vehicle.
Chapter 10 – Property and Motor Vehicle Insurance
19. (p. 339) The purpose of an assigned risk pool is to assist people with poor driving records in
obtaining automobile insurance coverage.
20. (p. 317) Peril is defined as:
21. (p. 317) Defective house wiring is an example of a:
Chapter 10 – Property and Motor Vehicle Insurance
22. (p. 317-318) The uncertainties of direct and indirect losses to personal or real property due to
fire, wind, accident, theft, etc., are called ____________ risks.
23. (p. 318) Possible losses due to negligence resulting in bodily harm or property damage to
others are called ____________ risks.
24. (p. 318) Starting a small business that may or may not succeed is an example of
___________ risk.
Chapter 10 – Property and Motor Vehicle Insurance
25. (p. 318) Using a home security system is an example of ____________ risk.
26. (p. 318) Wearing a seat belt in an automobile to protect yourself against injury is an example
of ____________ risk.
27. (p. 324) Which of the following would be covered by a home insurance policy?
Chapter 10 – Property and Motor Vehicle Insurance
28. (p. 323) The legal responsibility for the financial cost of another person’s losses or injuries is
referred to as:
29. (p. 323) If a homeowner leaves toys on stairs that results in injury to a delivery person, this
may be ruled as:
30. (p. 323) Negligence refers to:
Chapter 10 – Property and Motor Vehicle Insurance
31. (p. 323) While cleaning your home, a worker damages some furniture. You take action
against the worker’s employer to cover the cost of the damage. This is an example of a(n)
____________ liability.
32. (p. 324) High winds cause damage to trees, shrubs, and other plants. This insurance claim
would be covered under the ____________ component of homeowner’s insurance.
33. (p. 324) The additional living expenses component of a home insurance policy is designed
to:
Chapter 10 – Property and Motor Vehicle Insurance
34. (p. 325) Which of the following is considered personal property for home insurance
coverage?
35. (p. 325) Georgette Valentine has expensive photography equipment for use in her hobby.
Which one of the following types of coverage would pay for damage or theft of this
equipment?
36. (p. 325) The purpose of a household inventory is to:
Chapter 10 – Property and Motor Vehicle Insurance
37. (p. 327) The ____________ coverage of a home insurance policy would cover accidental
damage to another person’s property by a member of your family.
38. (p. 326) An umbrella policy is designed to cover:
39. (p. 327) Most home insurance policies provide coverage for:
Chapter 10 – Property and Motor Vehicle Insurance
40. (p. 327) Renter’s insurance would include coverage for:
41. (p. 327) Which one of the following is not covered by renter’s insurance?
42. (p. 328) Which form of homeowner’s policy provides coverage for the most risks?
Chapter 10 – Property and Motor Vehicle Insurance
43. (p. 328) Kelly and Bob Walton recently purchased a new home and desire coverage for all
causes of loss or damage except those specially excluded by the policy. They should obtain
the ____________ form of homeowner’s policy.
44. (p. 331) Your home insurance provides for replacement value for personal property losses. A
microwave is stolen. It cost $300 two years ago and has an expected life of six years. A
comparable microwave costs $400 today. What amount will the insurance company pay?
45. (p. 330) Which one of the following insurance policy provisions requires the insured to pay
for part of the loss if the property is not insured for the specified percentage of replacement
value?
Chapter 10 – Property and Motor Vehicle Insurance
46. (p. 330) The ____________ method to settle claims is based on the current replacement cost
of a damaged or lost item less depreciation.
47. (p. 331) Home insurance costs are affected most directly by:
48. (p. 331) 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?
Chapter 10 – Property and Motor Vehicle Insurance
49. (p. 332) The purpose of financial responsibility laws is to:
50. (p. 334) ____________ provides coverage for the risk of financial loss due to legal expenses,
medical expenses, lost wages, and other expenses associated with injuries caused by an
automobile accident for which you were responsible.
51. (p. 334) The 100 in 100/300/50 refers to:
Chapter 10 – Property and Motor Vehicle Insurance
52. (p. 334-335) Henry Edwards was injured in an accident caused by another driver who did not
have insurance. Henry’s medical expenses would be covered by:
53. (p. 334) Which one of the following coverages would pay for medical care for people who
were injured in your automobile?
54. (p. 335) Which of the following is a system in which drivers involved in an accident collect
medical expenses, lost wages, and related injury costs from their own insurance company?