Chapter 10: Protecting your Property

Question 1

insurance that guards against catastrophic losses of real and personal property caused by perils such as fire, theft, vandalism, wind storms, and other calamities.

Answer 1

property insurance

Question 2

insurance that offers protection against financial consequences that may arise from the insured’s responsibility for personal loss or personal injuries to others.

Answer 2

liability insurance

Question 3

what are the 2 types of exposures?

Answer 3

1. property losses
2. liability exposures

Question 4

what 2 things must one do to obtain proper insurance to protect against property loss?

Answer 4

1. inventory property
2. identify perils

Question 5

property inventory is important in case of loss because you must provide “proof of loss” to insurance companies.

Answer 5

true

Question 6

fill out and safely stash away what form w/ accompanying photos as proof of property ownership?

Answer 6

a personal property inventory form

Question 7

it’s important to identify perils because…

Answer 7

insurance companies limit certain perils that will be covered.

Question 8

liability exposures mostly result from…

Answer 8

negligence.

Question 9

liability insurance protects against losses and high legal fees in lawsuits that result.

Answer 9

true

Question 10

principle where the insured must not be compensated by the insurance company in an amount exceeding the insured’s economic loss.

Answer 10

principle of indemnity

Question 11

when the policyholder causes losses to collect insurance payments, this is called…

Answer 11

moral hazard.

Question 12

1. actual cash value
2. right of subrogation
3. other-insurance clause

These are included in what principle?

Answer 12

principle of indemnity

Question 13

replacement cost - value of physical depreciation =

Answer 13

actual cash value

Question 14

allows insurance company to request reimbursement from person who caused loss or their insurance company after they pay out a claim to the one who lost.

Answer 14

right of subrogation

Question 15

states that if a person has more than one insurance policy on a property, each company is only responsible for a prorated amount of the loss based on its proportion of the total insurance covering the property.

Answer 15

other-insurance clause

Question 16

requires policy holders to buy insurance in an amount equal toa specified percentage of the replacement value of their property.

Answer 16

co-insurance

Question 17

homeowner’s insurance policy that covers all perils expect those specifically excluded.

Answer 17

comprehensive policies

Question 18

homeowner’s insurance that names the particular perils covered.

Answer 18

named peril policies

Question 19

does Section I or Section II of homeowner’s insurance policies insure perils against which the home and its contents are protected?

Answer 19

section I

Question 20

does Section I or Section II of a homeowner’s insurance policy include comprehensive personal liability coverage offers protection against personal liability resulting from negligence?

Answer 20

section II

Question 21

premiums on homeowner’s insurance depend on:
1. structure type
2. location
3. credit score
4. extras: trampolines, dog, pool, etc.

Answer 21

true

Question 22

the dwelling unit, accompanying structures, and personal property of the owner and their families, including lawn/plants and business property (up to $2,500) are all covered by…

Answer 22

homeowner’s insurance

Question 23

provides scheduled coverage of items not adequately covered in standard HO policy.

Answer 23

personal property floater (PPF)

Question 24

does an unscheduled or scheduled personal property floater provide maximum protection?

Answer 24

unscheduled PPF

Question 25

does an unscheduled or scheduled personal property floater provide supplemental coverage?

Answer 25

scheduled PPF

Question 26

what HO form is renter's insurance on personal possessions of the renter inside the rented unit that provides coverage against HO-2 perils (common perils)?

Answer 26

HO-4 form

Question 27

which HO form is for owners of a condominium and provides a minimum of $1,000 of protection for building alterations?

Answer 27

HO-6 form

Question 28

pays actual costs of replacing articles w/ comparable ones.

Answer 28

replacement cost insurance

Question 29

what 3 types of losses are covered by homeowner's insurance?

Answer 29

1. direct property damage 2. indirect loss 3. additional expenses resulting from loss

Question 30

covers: 1. cost to defend insured 2. reasonable expenses incurred in helping insurance company's defense 3. payment of court costs These are covered by what type of insurance policy?

Answer 30

homeowner's policy

Question 31

what persons are covered under homeowner's insurance?

Answer 31

persons named in policy residents family members moved out (limited) guests (limited)

Question 32

homeowner's insurance provides worldwide coverage when off premises temporarily.

Answer 32

true

Question 33

amount needed to repair, rebuild, or replace an asset at today's prices.

Answer 33

replacements cost

Question 34

Coverage A = 10-40% Coverage B = 10% Coverage C = 75% Coverage D = 100% Coverage E = $100,000 Coverage F = $1,000/person Liability Coverage = $100,000+ these are the policy limits on homeowner's insurance

Answer 34

true

Question 35

reduces insurance premiums by doing away w/ frequent, small-loss claims that are proportionally less expensive to administer.

Answer 35

deductibles

Question 36

percentage deductibles are more commonly used by insurance companies.

Answer 36

true

Question 37

what are the 2 types of deductibles?

Answer 37

1. percentage 2. named peril

Question 38

each type of property damage coverage is subject to $250+ deductible.

Answer 38

true

Question 39

adding an inflation rider, increased coverage of replacement value, scheduling items, increasing liability/medical payment limits all increase...

Answer 39

premiums.

Question 40

increase deductible to reduce...

Answer 40

premiums.

Question 41

a comprehensive auto policy that is easy to understand.

Answer 41

personal automobile policy (PAP)

Question 42

what are the 4 parts of a personal automobile policy (PAP)?

Answer 42

1. Part A: liability coverage 2. part b: medical payments coverage 2. part c: uninsured motorists coverage 4. part d: coverage for physical damage to vehicle

Question 43

insurance that pays for collision damage to insured automobile no matter who's at fault.

Answer 43

collision insurance

Question 44

insurance that protects against loss to insured auto caused by any peril other than collision.

Answer 44

comprehensive automobile insurance

Question 45

insurance where each insured party is compensated by their own insurance company regardless of who is at fault.

Answer 45

no-fault automobile insurance

Question 46

1. rating territory (geographic location) 2. use of auto (mileage) 3. driver's personal characteristics (age, sex, marital status) 4. auto type 5. driving record 6. personal credit history These all influence what?

Answer 46

premiums

Question 47

what 2 things can be used to reduce car insurance premiums?

Answer 47

1. discounts 2. deductibles

Question 48

law requiring motorists to buy a specified minimum amount of auto liability insurance or provide other proof of financial responsibility.

Answer 48

financial responsibility laws

Question 49

laws that require motorists to show evidence of coverage before receiving license plates.

Answer 49

compulsory auto insurance laws

Question 50

financial responsibility laws require motorists to show coverage after they are involved in an accident.

Answer 50

true

Question 51

1. earthquake insurance 2. flood insurance 3. transportation insurance These are examples of supplemental property....

Answer 51

insurance.

Question 52

policy that provides added liability coverage for homeowner's and auto insurance for mid- to high-level income/net worth people.

Answer 52

personal liability umbrella policy

Question 53

you should get insurance protection for losses that seldom occur, but are potentially substantial.

Answer 53

true

Question 54

insurance agent that represents 1 company.

Answer 54

captive agent

Question 55

insurance agent that represents 2-10 different companies.

Answer 55

independent agent

Question 56

who should? : 1. review total property/liability exposures 2. inventory property and identify exposures 3. determine appropriate covered perils, limits, deductibles, and floater policies. 4. have a CPCU or CIC designation

Answer 56

a good insurance agent

Question 57

1. financial soundness of insurance company 2. claim-settlement practices 3. geographic range of operations These are all topics you should discuss with?

Answer 57

your insurance agent

Question 58

What process is this? : 1. Record names, addresses, and phone numbers of all witnesses of accident w/ license plates 2. notify law enforcement and insurance company/agent 3. insurance company investigates 4. show proof of loss (sworn statement) 5. insurer will decide whether they have an obligation to cover the damage

Answer 58

settling claims (process)

Question 59

when both the insured and insurer bring a 3rd party to solve the dispute on the company's responsibility to cover damage, they must use...

Answer 59

arbitration.

Question 60

an insurance specialist who works for the insurance company as an employee, independent adjustor, or for an adjustment bureau.

Answer 60

claims adjustor

Question 61

whose job is to diligently question/investigate an insurance claim while offering services to minimize settlement delays and financial hardship.

Answer 61

claims adjustor

Question 62

when insuring property people need to consider not only replacing and restoring actual property in the event of loss, but also the liability arising from the insured's...

Answer 62

responsibility for property loss.

Question 63

auto insurance is needed primarily as protection against the cost of significant...

Answer 63

loss.

Question 64

the reimbursement of the cost of repairing or replacing damaged structures without deducting depreciation.

Answer 64

replacement-cost coverage

Question 65

a liability suit could result against you if your dog bits your neighbor.

Answer 65

true

Question 66

For what 2 reasons does it pay to comparison shop insurance policies?

Answer 66

1. large variation in premiums 2. large variation in services

Question 67

even though homeowners are eligible for reimbursement on a full replacement-cost basis if they keep their home insured for at least 80% of the amount it would cost to build them today, inflation can cause the actual amount of coverage to fall...

Answer 67

below 80%.

Question 68

a higher insurance cost may result from a low credit score of the insured.

Answer 68

true

Question 69

standard homeowner's policies won't include coverage for damage done by flood.

Answer 69

true

Question 70

what does a $300,000/$500,000 bodily injury liability auto policy pay as a total to all injured victims in one accident?

Answer 70

$500,000