Spring2010Test4 - Finance 1200 Spring 2010 Test#4 True...

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Finance 1200 Spring 2010 Test #4 True / False Questions 1. Personal risks, property risks, and liability risks are types of speculative risks. 2. The most common method of dealing with risk is to shift, or transfer it to an insurance company or some other organization. 3. Self-insurance is the process of establishing a monetary fund that can be used to cover the cost of a loss. 4. Vicarious liability refers to the failure to take ordinary or reasonable care in a situation. 5. Personal property refers to building and other structures covered by homeowner's insurance. 6. Personal belongings that have a high value require coverage with a personal property floater. 7. The purpose of a household inventory is to provide evidence of items covered by home insurance. 8. Increased liability insurance is available with an umbrella policy. 9. Replacement cost for settling property insurance claims is less costly than the actual cash value method. 10. A home made of wood is more expensive to insure than a comparable brick structure. 11. The 100/300 amounts for bodily injury liability insurance refer to the costs of insurance coverage. 12. Medical payments automobile insurance coverage pays for the costs of injuries to persons in the driver's vehicle. 13. Collision coverage pays for damage to your vehicle for such hazards as fire, theft, or wind damage. 14. Property damage liability coverage would pay for damage to another vehicle for which you were at fault. Multiple Choice Questions 15. Peril is defined as: A. the refusal by an insurance company to pay for the covered loss. B. the cause of risk. C. the cause of a possible loss. D. an uncertainty as to loss. 1
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16. Defective house wiring is an example of a: A. hazard. B. peril. C. risk. D. speculation. 17. Using a home security system is an example of ____________ risk. A. shifting B. accepting C. reducing D. sharing E. transferring 18. The legal responsibility for the financial cost of another person's losses or injuries is referred to as: A. theft. B. robbery. C. liability. D. assigned risk. E. collusion. 19. If a homeowner leaves toys on stairs that results in injury to a delivery person, this may be ruled as: A. vicarious liability. B. negligence. C. assigned risk. D. umbrella coverage. E. coinsurance. 20. The additional living expenses component of a home insurance policy is designed to: A. pay for temporary housing while your home is repaired. B. cover damage to property while away from home. C. reimburse a homeowner for damage done by a visitor. D. pay for medical expenses of people injured on your property. E. pay for repairs caused by fire or other hazards. 21. An umbrella policy is designed to cover: A. expensive personal property. B. additional buildings on your property.
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Spring2010Test4 - Finance 1200 Spring 2010 Test#4 True...

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