Chapter 22

Question 1

Protection against possible financial loss

Answer 1

insurance

Question 2

Contract between an insurance company and a person by which that person joins a risk-sharing group

Answer 2

policy

Question 3

a fee for insurance

Answer 3

premium

Question 4

The chance of a loss or injury

Answer 4

risk

Question 5

Anything that may possibly cause a loss

Answer 5

peril

Question 6

Anything that increases the the likelihood of loss through peril

Answer 6

hazard

Question 7

Lack of attention

Answer 7

negligence

Question 8

The set amount that the policyholder must pay per loss on an insurance policy

Answer 8

deductible

Question 9

Legal responsibility for the financial cost of another person’s losses or injuries

Answer 9

liability

Question 10

Coverage that provides protection for a residence and its associated financial risks, such as property damage and injuries to others

Answer 10

homeowners insurance

Question 11

Additional property insurance that covers the damage or loss of a specific item of high value

Answer 11

personal property floater

Question 12

Coverage that pays the costs of minor accidental injuries to visitors of the policyholders property

Answer 12

medical payments coverage

Question 13

Method for settling claims in which the payment received is based on the replacement cost of an item minus depreciation

Answer 13

actual cash values

Question 14

Method for settling claims in which one receives the full cost of repairing or replacing an item

Answer 14

replacement value

Question 15

Insurance that covers physical injuries caused by a vehicle accident for which one is responsible

Answer 15

bodily injury liability

Question 16

Insurance that provides coverage for accidents involving an uninsured or hit-and-run driver

Answer 16

uninsured motorists protection

Question 17

Motor vehicle insurance that applies when one damages the property of others

Answer 17

property damage liability

Question 18

insurance that covers damage to one’s vehicle when it is involved in an accident

Answer 18

collision

Question 19

An arrangement whereby drivers who are involved in accidents collect money from their own insurance companies

Answer 19

no-fault system

Question 20

A group of people who cannot get motor vehicle insurance are assigned to each insurance company operating in the state

Answer 20

assigned risk pool

Question 21

Which insurance term refers to anything that may cause a loss?
A. Risk
B. Peril
C. Hazard
D. Liability

Answer 21

Peril

Question 22

A risk that is not insurable is known as a…
A. Pure risk
B. Personal risk
C. Liability risk
D. Speculative risk

Answer 22

speculative

Question 23

Refusing to smoke for health purposes is an example of the risk management method known as risk…
A. Reduction
B. Avoidance
C. Assumption
D. Shifting

Answer 23

Reduction

Question 24

An insurance policy with a deductible is a combination of…
A. Risk avoidance and risk reduction
B. Risk assumption and risk reduction
C. Risk shifting and risk assumption
D. Risk reduction and risk shifting

Answer 24

Risk shifting and risk assumption

Question 25

The personal liability portion of a homeowners insurance policy protects the insured against financial loss when his or her… A. House floods B. Jewelry is stolen C. Guests injure themselves D. Reputation is damaged

Answer 25

Guests injure themselves

Question 26

Renters insurance included coverage for all the following items except… A. The building B. Personal property C. Additional living expenses D. Personal liability

Answer 26

The building

Question 27

The basic home insurance policy form protects against several perils, including… A. Sleet B. Lightning C. Flood D. Earthquake

Answer 27

Lightning

Question 28

Home insurance rates are lower for houses… A. Built of wood B. Near fire hydrants C. In a high-crime area D. Costing $300,000 or more

Answer 28

Near fire hydrants

Question 29

What kind of motor vehicle insurance provides protection to the policyholder if he or she is injured by a hit-and-run driver? A. Property damge liability B. Uninsured motorist’s protection C. Collision insurance D. Comprehensive physical damage coverage

Answer 29

Uninsured motorist protection

Question 30

An assigned risk pool includes the people in a state who… A. Under 25 B. Drive the same make car C. Live in big cities D. Cannot get coverage

Answer 30

Cannot get coverage

Question 31

Defective wiring is an example of a(n) ________ because it increases the likelihood of loss through some peril.

Answer 31

hazard

Question 32

The type of insurance that covers damage to the insured’s car when it is involved in an accident is _______ insurance.

Answer 32

collision

Question 33

A(n) __________ is the purchaser of an insurance policy.

Answer 33

policyholder

Question 34

A(n) __________ supplements basic personal liability coverage and is also called a personal catastrophe policy.

Answer 34

umbrella policy

Question 35

_________ is protection against possible financial loss.

Answer 35

Insurance

Question 36

A list or other documentation of personal belongings, with purchase dates and cost information, is a(n) _________.

Answer 36

household inventory

Question 37

The chance of loss or injury is called ______.

Answer 37

risk

Question 38

Every state has a(n) ________ which includes all the people who cannot get automobile insurance.

Answer 38

assigned risk pool

Question 39

Each party involved in an accident collects money from his or her own insurance company under a(n) _______.

Answer 39

no-fault system

Question 40

Anything that may cause a loss is a(n) _______.

Answer 40

peril