Chapter 10—Protecting Your Property
PFIN.BILL.17.10-2 – LO: 10-2
United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills
Bloom’s: Applying
119. After packing up to return home for the holidays after the fall semester, Peter stopped at Double T bookstore to sell
back his used textbooks. After collecting $25, he headed back to his pickup truck only to find a broken window, the truck
broken into, and all his suitcases and personal property gone. The damages to his pickup would be covered by
a.
property damage liability auto coverage.
b.
uninsured motorist auto coverage.
c.
personal injury protection.
d.
comprehensive (other than collision) auto coverage.
e.
collision coverage.
PFIN.BILL.17.10-4 – LO: 10-4
United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills
Bloom’s: Applying
120. Jake drove Amanda’s truck to the football game because his car was broken. On the way home, Jake was involved in
an accident that was his fault. The resulting liability damages totaled $85,000. Jake has $100,000 liability coverage on his
car, and Amanda has $50,000 on her truck. How would the $85,000 liability damages be paid for this accident?
a.
$50,000 from Amanda’s policy with no further payment
b.
$85,000 from Jake’s policy
c.
$50,000 from Amanda’s policy plus $35,000 from Jake’s policy
d.
$50,000 from Amanda’s policy plus $35,000 out of Jake’s pocket
e.
$50,000 from Amanda’s policy plus $35,000 out of Amanda’s pocket.
PFIN.BILL.17.10-4 – LO: 10-4
United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills
Bloom’s: Analyzing
121. Auto insurance premiums would be affected by
a.
Chapter 10—Protecting Your Property
b.
c.
d.
e.
PFIN.BILL.17.10-4 – LO: 10-4
United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills
United States – KS – DISC: Risk and Return
Bloom’s: Remembering
122. If you have an outstanding loan on your car, the contract will require you to carry ____ insurance.
a.
bodily injury liability
b.
property damage liability
c.
medical payments
d.
collision and comprehensive
e.
all of these
PFIN.BILL.17.10-4 – LO: 10-4
United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills
Bloom’s: Remembering
123. Premium discounts may result from
a.
safe driving record and prompt premium payment.
b.
good grades and long-term employment.
c.
multiple auto ownership and good credit rating.
d.
safe driving record and good grades.
e.
long-term employment and prompt payment of traffic tickets.
PFIN.BILL.17.10-4 – LO: 10-4
United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills
Bloom’s: Applying
124. Factors that affect home insurance costs include
Chapter 10—Protecting Your Property
a.
type of structure.
b.
location of home.
c.
credit score.
d.
all of the above.
e.
both a and b.
PFIN.BILL.17.10-2 – LO: 10-2
United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills
Bloom’s: Remembering
125. Auto insurance premiums are generally reduced by
a.
choosing a higher deductible.
b.
buying a sporty “high powered” car.
c.
moving to a larger city.
d.
avoiding carpooling to work.
e.
all of the above
PFIN.BILL.17.10-4 – LO: 10-4
United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills
United States – KS – DISC: Risk and Return
Bloom’s: Applying
126. You could save money on your car insurance premiums by
a.
buying a 4-door sedan rather than a high-performance vehicle.
b.
choosing a $1,000 deductible rather than a $100 deductible.
c.
moving to a small town with a low accident rate.
d.
b and c.
e.
none of these would make any difference.
PFIN.BILL.17.10-4 – LO: 10-4
United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills
United States – KS – DISC: Risk and Return
Bloom’s: Applying
Chapter 10—Protecting Your Property
127. Auto insurance companies may offer premium discounts for
a.
being a good student.
b.
installing anti-theft devices.
c.
taking a defensive driving course.
d.
all of these.
e.
none of these.
Easy
PFIN.BILL.17.10-4 – LO: 10-4
United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills
Bloom’s: Remembering
128. A(n) ____ agent represents multiple insurance companies.
a.
captive
b.
business
c.
good
d.
independent
e.
employed
Easy
PFIN.BILL.17.10-6 – LO: 10-6
United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills
Bloom’s: Remembering
129. An automobile covered under a policy with a $500 collision deductible is damaged in a collision with a fence. It
could be repaired for $15,000, replacement cost is $25,000, and the depreciation and physical condition deduction is
$5,000. How much will the insurance company pay?
a.
$24,500
b.
$7,500
c.
$15,000
d.
$14,500
e.
Some other amount
Challenging
PFIN.BILL.17.10-4 – LO: 10-4
United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills
United States – KS – DISC: Risk and Return
Chapter 10—Protecting Your Property
130. What factor affects insurance premiums the most?
a.
Style of home
b.
Age of home
c.
Brick or wood exterior
d.
Credit score
e.
Detached or attached garage
Easy
PFIN.BILL.17.10-2 – LO: 10-2
United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills
United States – KS – DISC: Risk and Return
Bloom’s: Remembering
131. The advisable dollar coverage for any one auto accident is no less than
a.
$50,000.
b.
$100,000.
c.
$200,000.
d.
$300,000.
e.
$500,000.
Easy
PFIN.BILL.17.10-3 – LO: 10-3
United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills
United States – KS – DISC: Risk and Return
Bloom’s: Remembering
132. The best place to buy automobile insurance is
a.
insurance agent
b.
auto dealer
c.
finance company
d.
state insurance commission
e.
none of the above
a
Easy
PFIN.BILL.17.10-3 – LO: 10-3
United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills
United States – KS – DISC: Risk and Return
Bloom’s: Remembering
133. Section I of a homeowner’s insurance policy covers all of the following except
a.
personal liability
b.
dwelling
c.
other structures
d.
personal property
a
Bloom’s: Evaluating
Chapter 10—Protecting Your Property
PFIN.BILL.17.10-2 – LO: 10-2
United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills
United States – KS – DISC: Risk and Return
Bloom’s: Remembering
INSTRUCTIONS: Choose the word or phrase in [ ] that will correctly complete the statement. Select A for the first item,
B for the second item, and C if neither item will correctly complete the statement.
134. The principle of [indemnity | peril] states that the insured may not be compensated by the insurance company in an
amount exceeding the insured’s economic loss.
PFIN.BILL.17.10-1 – LO: 10-1
United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills
United States – KS – DISC: Risk and Return
Bloom’s: Remembering
135. When considering your possible losses as a property owner, you would be more likely to suffer a very severe loss
from [loss of property | liability claims].
PFIN.BILL.17.10-1 – LO: 10-1
United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills
United States – KS – DISC: Risk and Return
Bloom’s: Remembering
136. [Negligence | Indemnity] is the failure to act in a reasonable manner or take necessary steps to protect others from
harm.
PFIN.BILL.17.10-1 – LO: 10-1
United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills
United States – KS – DISC: Risk and Return
Bloom’s: Remembering
137. An HO-2 policy will protect your property from losses due to [all perils except those listed | listed perils only].
Chapter 10—Protecting Your Property
138. Bill was the at-fault party when you and he collided. Your insurance company has paid for the damages to your car.
Now, it intends to recover this money from Bill. This is the right of [subrogation | indemnification].
139. An HO-3 policy will protect your property from losses due to [all perils except those listed | listed perils only].
140. Actual cash value is calculated by subtracting depreciation from the [purchase price | replacement cost] of an item.
141. Most HO policies [would | would not] contain a clause requiring you to carry insurance equal to a minimum percent
of the replacement value of your home in order to be paid in full for small losses.
Chapter 10—Protecting Your Property
142. Your house has a replacement value of $120,000. Your HO policy has an 80% co-insurance clause. In order to
receive full compensation if your house is totally destroyed, you must carry insurance for [$96,000 | $120,000].
143. [Comprehensive | Named peril] policy covers all perils unless they are specifically excluded.
144. [HO-2 | HO-3] is an example of a named peril policy.
145. Earthquake policy and flood protection [would | would not] be provided by the standard HO policy.
146. Negligent acts must be [intentional | unintentional] in order to be insured.
Chapter 10—Protecting Your Property
147. You own your house. The amount of HO insurance coverage you will have on your furniture will be dependent upon
[the replacement value of your house | the amount of insurance on your home].
148. You use a small building on your property to manufacture widgets. This building [will | will not] be covered by your
standard HO policy.
149. The personal property of your [boarder | visiting mother-in-law] would be covered by your HO policy.
150. Your $10,000 stamp collection would be best protected under [your HO policy | a personal property floater].
Chapter 10—Protecting Your Property
151. [Most | Few] tenants carry renters insurance.
152. If your furniture in your rented apartment is destroyed by a fire, it [would | would not] be covered by your landlord’s
policy.
153. A renter’s policy typically [does | does not] provide protection against liability claims.
154. If you are sued, the liability portion of your property insurance [covers | does not cover] your defense.
Chapter 10—Protecting Your Property
155. Decreasing the amount of deductibles will [increase | decrease] your insurance premiums.
156. The insurance company [will | will not] provide liability coverage if your dog bites the neighbor.
157. Medical payments coverage [would | would not] pay for the medical bills of passengers in your car who are not
related to you.
158. Uninsured motorist insurance is relatively [expensive | inexpensive].
159. If a large wild animal damages your car, payment will come from your [collision | comprehensive] protection.
Chapter 10—Protecting Your Property
160. Buying collision and comprehensive auto insurance from the dealer selling you the car is considered to be a [good |
bad] idea.
161. The theft of your favorite jacket from your locked car [would be | would not be] taken care of by your renter’s policy.
162. Sally drove Jessie’s car to the mall and was involved in an accident that was her fault. The primary auto insurance
that will cover this accident is [Sally’s | Jessie’s].
163. The type of car you drive will have [no | a large] effect on the premiums you pay.
Chapter 10—Protecting Your Property
164. Most insurance companies [will | will not] offer good student discounts on car insurance premiums.
165. A personal liability umbrella policy is designed to [replace | supplement] HO and car liability coverage.
166. Umbrella liability insurance is more likely to be needed by [higher | lower] income persons.
167. An insurance adjustor is working for the [insurance company | claimant].
168. The professional designation you want your property insurance agent to have is the [ACLU | CPCU].
Chapter 10—Protecting Your Property
169. Research shows that people with [lower | higher] credit scores tend to file more insurance claims.
170. The advisable dollar coverage for any one auto accident is at least [$100,000 | $300,000].
171. The best way to buy automobile insurance is through your [finance company | independent agent].
172. Section I of a homeowner’s insurance policy covers [medical payments | dwelling].
173. Section II of a homeowner’s insurance policy covers [personal property | personal liability].
Chapter 10—Protecting Your Property
PFIN.BILL.17.10-2 – LO: 10-2
United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills
United States – KS – DISC: Risk and Return
Bloom’s: Remembering
174. Jorge and Nancy had a $30,000 repair bill on their home after the tornado went through town. Their policy contained
the usual 80% co-insurance clause. Their home’s replacement value was $150,000; their policy coverage was $110,000
with a $250 deductible.
a.
How much insurance should they have carried to meet the co-insurance obligation?
b.
What percentage of this loss will the insurance company pay?
c.
How much of the loss will Jorge and Nancy have to absorb? (Show all work.)
a.
Required coverage = .80 × $150,000 = $120,000
b.
Company obligation = $110,000/$150,000 = 73%
Portion Jorge and Nancy pay = $30,000 − $21,717.50 = $8,282.50
PFIN.BILL.17.10-2 – LO: 10-2
United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills
United States – KS – DISC: Risk and Return
Bloom’s: Evaluating
175. Jim lost control of his car. He wiped out the car in front of him, hit a pedestrian, and then drove into a home. Jim has
auto liability insurance of 25,000/50,000/10,0000. He also has medical payments coverage of $1,000 and a $250
deductible on his collision coverage. The following damage resulted:
Pedestrian’s claims
$29,000
Jim’s injuries
1,500
Other driver’s claims
12,000
Passenger’s (in other car) claims
20,000
Damage to Jim’s car
11,500
Damage to other car
12,500
Damage to the home
8,000
How much will Jim’s auto insurance coverage pay for this accident? For how much will Jim be personally responsible?
$25,000
Other driver
12,000
Total bodily injury
$61,000
$50,000
$11,000
Other car
$10,000
Chapter 10—Protecting Your Property