Chapter 10—Protecting Your Property
1. Property insurance is meant to protect property owners from two basic types of exposures, physical loss of property and
loss through depreciation.
a.
True
b.
False
False
Challenging
2. A peril is a cause of loss.
a.
True
b.
False
True
Easy
3. Property inventories are important to identify insurance needs and to substantiate claims.
a.
True
b.
False
True
Moderate
4. Antiques, collections, and boats are adequately protected under a standard homeowner’s policy.
a.
True
b.
False
False
Easy
Chapter 10—Protecting Your Property
5. Personal property floaters provide increased coverage for jewelry and other collectable items at an additional premium.
a.
True
b.
False
True
Easy
6. The terms “perils” and “losses” refer to the same thing.
a.
True
b.
False
False
Easy
7. A trampoline in your back yard is an example of a hazard.
a.
True
b.
False
True
Easy
8. Liability claims may result from alleged negligent acts.
a.
True
b.
False
True
Chapter 10—Protecting Your Property
Easy
9. Liability insurance generally provides some coverage for legal fees.
a.
True
b.
False
True
Moderate
10. You would be considered to be negligent when you, a dependent, or another named insured’s action causes harm or
property loss.
a.
True
b.
False
True
Moderate
11. The principle of indemnity states that the insured can be compensated for an amount equal to his economic loss.
a.
True
b.
False
True
Easy
12. Actual cash value provides coverage at the current market value of your property.
Chapter 10—Protecting Your Property
a.
True
b.
False
False
Moderate
13. Actual cash value is defined as replacement cost minus depreciation.
a.
True
b.
False
True
Easy
14. The most common definition of actual cash value is purchase price less depreciation.
a.
True
b.
False
False
Moderate
15. The principle of indemnity does not apply to life and health insurance.
a.
True
b.
False
True
Moderate
Chapter 10—Protecting Your Property
16. The principle of indemnity generally limits the amount that the insured may collect to the actual cash value of the
property.
a.
True
b.
False
True
Easy
17. If your insurance company makes a payment to you, subrogation is the right of the company to collect from the person
causing the accident or from his/her insurance company.
a.
True
b.
False
True
Easy
18. The “other-insurance clause” helps prevent the violation of the principle of indemnity.
a.
True
b.
False
True
Moderate
19. The right of subrogation allows the insurer to get reimbursed for claims paid.
a.
True
b.
False
True
Chapter 10—Protecting Your Property
20. Earthquakes are covered under most homeowner’s policies.
a.
True
b.
False
False
Easy
21. Nancy’s house has been completely destroyed by fire. Prior to the accident, the house had a value of $100,000. Nancy
had two separate policies totaling $60,000 each. She may collect $60,000 from each insurance company.
a.
True
b.
False
False
Easy
22. An 80 percent co-insurance clause requires the insured to carry insurance protection equal to 80% of the original cost
of the home.
a.
True
b.
False
False
Moderate
Moderate
Chapter 10—Protecting Your Property
23. A co-insurance clause will cause insurers to proportionately reduce claims payments unless you carry insurance up to
a specific amount, such as 80 percent of the replacement value.
a.
True
b.
False
True
Challenging
24. A house with a replacement value of $110,000 is currently insured for $90,000. The house has suffered a $15,000 loss
from windstorm damage. The insurance company will pay the full $15,000 less the deductible.
a.
True
b.
False
True
Moderate
25. HO-4 and HO-6 are for renters and owners of condominiums, respectively.
a.
True
b.
False
True
Challenging
26. The HO-3 form is a good policy for first-time buyers because it is a named perils policy.
a.
True
b.
False
False
Challenging
Chapter 10—Protecting Your Property
27. An HO-3 form with one insurance company may provide completely different coverage than an HO-3 form with
another insurance company.
a.
True
b.
False
False
Easy
28. As a tenant, you would purchase an HO-3 policy.
a.
True
b.
False
False
Moderate
29. An HO-1 policy lists more perils for which you are insured than does an HO-3 policy.
a.
True
b.
False
False
Moderate
30. While you were away on winter vacation, there was a severe snowstorm that caused your roof to cave in causing a
$20,000 loss. Your H0-2 policy will cover this loss.
a.
True
Chapter 10—Protecting Your Property
b.
False
True
Challenging
31. Connie rented a hotel room while on vacation. If someone breaks into her room, her HO-4 policy will cover her stolen
property.
a.
True
b.
False
True
Challenging
32. Covered liability perils do not include claims for libel, slander, or character defamation.
a.
True
b.
False
True
Moderate
33. Protection for personal property both at home and away from home is a provision of the homeowners’ policy.
a.
True
b.
False
True
Moderate
Chapter 10—Protecting Your Property
34. Like standard homeowners’ policies, a renters’ policy liability coverage includes coverage away from home.
a.
True
b.
False
True
Moderate
35. Replacement cost and actual cash value is the same thing.
a.
True
b.
False
False
Easy
36. Limits are normally specified in the homeowners’ insurance contract for some categories of personal property.
a.
True
b.
False
True
Moderate
37. Replacement cost coverage is available for renters but requires an extra premium.
a.
True
b.
False
True
Easy
Chapter 10—Protecting Your Property
38. To save premium costs, one should decrease her deductible and liability coverage on a homeowners’ policy.
a.
True
b.
False
False
Easy
39. Automobile liability claims could potentially be more costly to you than car damage claims.
a.
True
b.
False
True
Easy
40. Careful drivers have limited need for liability protection, because they are not likely to be at fault in an accident.
a.
True
b.
False
False
Moderate
41. A $100,000/$300,000 bodily injury liability automobile policy could pay up to $100,000 to one person or up to
$300,000 to several people seeking damages.
a.
True
b.
False
Chapter 10—Protecting Your Property
True
Easy
42. When you charge your car rental to your credit card, collision insurance may be offered under the umbrella of the
credit card..
a.
True
b.
False
True
Moderate
43. Your automobile liability insurance covers the damage caused to your automobile when you are at fault in an accident.
a.
True
b.
False
False
Easy
44. The insurance company will provide defense for a covered person against both civil and criminal charges involving
her motor vehicle.
a.
True
b.
False
False
Moderate
Chapter 10—Protecting Your Property
45. A rental car could be a covered auto under your personal auto policy collision section.
a.
True
b.
False
True
Moderate
46. A person need not be occupying an automobile when the accidental injury occurs to be eligible for benefits from a
PAP.
a.
True
b.
False
True
Challenging
47. Automobile medical payments coverage applies to the named insured and family members who are injured while
occupying any automobile.
a.
True
b.
False
True
Easy
48. Uninsured motorist protection usually provides protection to your car if a hit-and-run incident occurs.
a.
True
b.
False
False
Chapter 10—Protecting Your Property
49. Collision coverage would pay for damages to your car if a tree falls on it.
a.
True
b.
False
False
Challenging
50. The type of car you drive has little effect on your auto insurance premiums.
a.
True
b.
False
False
Easy
51. State financial responsibility laws require only auto liability insurance.
a.
True
b.
False
True
Easy
52. The automobile insurance policy normally does not cover the theft of personal property left in the insured vehicle.
a.
True
Moderate
Chapter 10—Protecting Your Property
b.
False
True
Moderate
53. Financial responsibility laws in most states are high enough to adequately meet one’s auto liability needs.
a.
True
b.
False
False
Easy
54. A personal property floater and a personal liability umbrella policy offer similar coverage.
a.
True
b.
False
False
Challenging
55. A personal liability umbrella policy typically includes coverage for auto related liability losses in excess of the limits
purchased in a personal auto policy.
a.
True
b.
False
True
Moderate
Chapter 10—Protecting Your Property
56. The personal liability umbrella policy typically includes coverage for liability losses that are in excess of the limits of
the comprehensive personal liability coverage provided in the homeowner’s policy.
a.
True
b.
False
True
Moderate
57. Personal umbrella policies are intended primarily for wealthy families who are often viewed as targets for large
liability claims.
a.
True
b.
False
True
Easy
58. A captive agent represents many insurance companies.
a.
True
b.
False
False
Easy
59. One should never admit fault at the scene of an accident.
a.
True
b.
False
True
Chapter 10—Protecting Your Property
60. Uninsured motorist coverage covers passengers in your car from losses caused by your negligence.
a.
True
b.
False
False
Moderate
61. Collision insurance pays for damage to your automobile regardless of who is at fault.
a.
True
b.
False
True
Moderate
62. You are single and age 35. Getting married will lower your auto insurance premiums.
a.
True
b.
False
False
Moderate
63. The federal government subsidizes the flood insurance program.
a.
True
Easy
Chapter 10—Protecting Your Property
b.
False
True
Easy
64. Age of home affects insurance premiums the most.
a.
True
b.
False
False
Moderate
65. The advisable dollar limit for any one auto accident is $250,000.
a.
True
b.
False
False
Moderate
66. Lenders typically require collision coverage on cars they finance.
a.
True
b.
False
True
Easy
67. Section I of a homeowner’s insurance policy covers medical payments.
Chapter 10—Protecting Your Property
a.
True
b.
False
False
Moderate
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
68. Section I of a homeowner’s insurance policy covers the insured’s dwelling, accompanying structures, and personal
property.
a.
True
b.
False
True
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
69. Section II of a homeowner’s insurance policy covers personal property.
a.
True
b.
False
False
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
70. All property insurance companies require you to show the following when making a claim:
a.
Proof of loss
b.
Personal property inventory
c.
Values at the time of inventory
d.
All of the above.
Easy
PFIN.BILL.17.10-6 – LO: 10-6
United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills
United States – AK – DISC: Risk and return
Chapter 10—Protecting Your Property
71. The basic principles of property and liability insurance pertain to:
a.
b.
c.
d.
Easy
PFIN.BILL.17.10-1 – LO: 10-1
United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills
Bloom’s: Remembering
72. Some common liability risks include:
a.
driving a car
b.
entertaining guests at home
c.
being careless in performing professional duties
d.
all of the above
Easy
PFIN.BILL.17.10-1 – LO: 10-1
United States – BUSPROG: Analytic skills – BUSPROG: Analytical skills
Bloom’s: Understanding
73. The asset most likely to be specifically itemized in a personal property floater is
a.
sofa.
b.
clothing.
c.
jewelry.
d.
garden equipment.
e.
all of these.
c
Moderate
PFIN.BILL.17.10-1 – LO: 10-1
United States – KS – DISC: Risk and Return
United States – KS – DISC: Risk and Return
Bloom’s: Remembering