Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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The person who acts as the insurance company’s representative and looks at
your damaged property to determine the extent of loss is
a. | an insurer. | c. | an adjuster. | b. | a policyholder. | d. | a sales
representative. |
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2.
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An amount you must pay before the insurance company pays a claim is
a. | a premium. | c. | self-insurance. | b. | a claim. | d. | a deductible. |
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3.
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Collision coverage provides for payment of damages up to
a. | the current value of the car. | b. | the purchase price of the car when you bought
it. | c. | the price of a new car similar to the car damaged. | d. | All the above are
true; the method chosen depends on the insurance company. |
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4.
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Property insurance is designed to protect you from financial loss if your
property is lost or destroyed as a result of
a. | theft. | c. | windstorm. | b. | floods. | d. | all of the
above. |
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5.
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Property not attached to the land, such as furniture or clothing, is
a. | insured property. | c. | real property. | b. | personal property. | d. | attached
property. |
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6.
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Causes of loss are
a. | claims. | c. | economic risk. | b. | perils. | d. | coverage. |
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7.
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A basic type of property insurance that protects against losses caused by fire
or lightning is
a. | personal liability coverage. | c. | homeowners
policy. | b. | standard fire policy. | d. | extended coverage. |
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8.
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Medical payments protection provides medical coverage for
a. | policyholders while riding in their own car. | b. | policyholders while
riding in someone else’s car. | c. | guests riding in the insured’s
car. | d. | all of the above. |
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9.
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Insurance is important because
a. | it provides economic security. | b. | it helps our economy. | c. | premiums collected
are used to make loans that help our economy grow. | d. | all of the
above. |
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10.
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An insurance agent that sells insurance policies from a variety of different
companies is
a. | an insurance broker. | b. | a self-insured insurance
agent. | c. | a single company insurance agent. | d. | an independent insurance
agent. |
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11.
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The two major categories of automobile insurance are
a. | personal injury and property damage coverage. | b. | medical payments and
collision insurance coverage. | c. | no-fault and assigned-risk
insurance. | d. | automobile liability insurance. |
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12.
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When an individual or business assumes the total risk of economic loss, the type
of insurance is
a. | liability insurance. | c. | self insurance. | b. | property insurance. | d. | coinsurance. |
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13.
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The risk associated with illness, disability, loss of income, unemployment, old
age, and premature death is
a. | insurance. | c. | property risk. | b. | liability risk. | d. | personal risk. |
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14.
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Auto insurance that provides coverage to high risk drivers who are unable to
purchase insurance in the normal fashion is
a. | compulsory insurance laws. | c. | insurance laws. | b. | financial
responsibility laws. | d. | assigned-risk plan. |
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15.
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The money a policy holder must pay for insurance coverage is
a. | a premium. | c. | self-insurance. | b. | a claim. | d. | a deductible. |
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16.
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Property permanently attached to land, such as a house or garage, is
a. | insured property. | c. | real property. | b. | personal property. | d. | attached
property. |
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17.
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Insurance that replaces an item that has been destroyed is
a. | personal property insurance. | c. | replacement
insurance. | b. | real property insurance. | d. | investment insurance. |
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18.
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Automobile coverage that protects you against claims if your car damages someone
else’s property and you are at fault is
a. | collision insurance coverage. | b. | property damage liability
coverage. | c. | medical payments protection coverage. | d. | comprehensive physical damage
coverage. |
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19.
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The sharing of expenses by the policy holder and the insurance company is
a. | liability insurance. | c. | self-insurance. | b. | property insurance. | d. | coinsurance. |
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20.
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The planned protection provided by sharing economic losses is
a. | insurance. | c. | property risk. | b. | liability risk. | d. | economic risk. |
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21.
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Insurance coverage that protects you from claims resulting from injuries or
deaths for which you are found to be at fault is
a. | personal injury and property damage coverage. | b. | medical payments and
collision insurance coverage. | c. | bodily injury liability
insurance. | d. | automobile liability insurance. |
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22.
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The decrease in value of property is
a. | appreciation. | c. | valuation. | b. | recession. | d. | depreciation. |
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23.
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Laws that require you to carry certain types of automobile insurance before your
car can be licensed are
a. | compulsory insurance laws. | c. | insurance laws. | b. | financial
responsibility laws. | d. | assigned-risk plans. |
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24.
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The risk of potential losses to others as a result of injury or damage you may
have caused is
a. | insurance. | c. | property risk. | b. | liability risk. | d. | personal risk. |
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25.
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Additional protection of property that covers damage caused by perils such as
wind, hail, smoke, and falling aircraft, among other things, is
a. | personal liability coverage. | c. | homeowner’s
policy. | b. | standard fire policy. | d. | extended coverage. |
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26.
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The risk of damage to or loss of property due to theft, wind, fire, flood, or
some other hazard is
a. | accidents. | c. | property risk. | b. | liability risk. | d. | personal risk. |
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27.
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The general term used to describe insurance that you buy to protect yourself
against financial loss if you injure someone else or damage someone else’s property in an
automobile accident is
a. | personal injury and property damage coverage. | b. | medical payments and
collision insurance coverage. | c. | no-fault and assigned-risk
insurance. | d. | automobile liability insurance. |
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