Chapter 10: Property and Motor Vehicle Insurance Questions and Answers(SCORED A)
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Course
Property and Motor Vehicle Insurance
Institution
Property And Motor Vehicle Insurance
Risk - ANSWER-Uncertainty or lack of predictability as to loss
that faces a person or property covered by insurance
Peril - ANSWER-The cause of a possible loss or risk, such as
fire, windstorm, robbery, disease, or death
Hazard - ANSWER-Increases the likelihood of a loss through
some peril...
Chapter 10: Property and Motor Vehicle
Insurance Questions and Answers(SCORED A)
Risk - ANSWER-Uncertainty or lack of predictability as to loss
that faces a person or property covered by insurance
Peril - ANSWER-The cause of a possible loss or risk, such as
fire, windstorm, robbery, disease, or death
Hazard - ANSWER-Increases the likelihood of a loss through
some peril (e.g., driving drunk, defective house wiring)
Risk Management - ANSWER-Organized, planned strategy to
protect your assets and family
Pure Risks - ANSWER--Personal risks (Death/Health)
-Property risks(Home/Auto)
-Liability risks(Negligence)
*Insurable
Speculative Risk - ANSWER-Chance of loss or gain, such as starting a
business or gambling
*Uninsurable
Risk Avoidance - ANSWER-eliminate risk by not participating (don't sky dive)
Risk Reduction - ANSWER-take measures to reduce the risk (wear seat belt)
Risk Assumption - ANSWER-assume the risk because the financial loss is small (don't
insure $1,500
farm truck)
Risk Shifting - ANSWER-transfer the risk to another
party, like an insurer (accident and illness)
Deductables - ANSWER-• Amount insured pays before insurance
company pays
• The higher the deductible, the lower your
premiums will be
, • Premiums (insurance cost) are usually the
biggest factor in deciding coverage
Liability - ANSWER-legal responsibility for cost of another
person's losses or injuries
Negligence - ANSWER-Failure to take ordinary or reasonable care, such as failure to
supervise children in a pool
Strict Liability - ANSWER-You are held responsible for your own intentional or
unintentional actions
Vicarious Liability - ANSWER-You are held responsible for the actions of another
person, such as your child breaking a neighbor's window
Homeowners Insurance Covers... - ANSWER-- Damage to or destruction of your house
and other structures, including landscaping
- Additional living expenses - living elsewhere
- Personal property at or away from home
- Personal property floater - "schedule" high value
items (e.g., wedding rings, musical instruments)
- Household inventory with documentation
(You must prove ownership and value
• Video entire household contents
Personal Liability Coverage - ANSWER-• Protects you from financial loss because of
your
actions causing damage to others' property
- $1,000,000 or more
Medical payments coverage - ANSWER-for minor injuries to others caused by you,
family members or pets, occurring on your property or away from home
Umbrella Policy - ANSWER-also called a personal catastrophe policy
-supplements basic personal liability coverage
Specialized Coverage - ANSWER-- Endorsements add coverage to a
standard policy, for things such as earthquake damage
• Without endorsement, these are EXCLUDED
from coverage
• Pay an additional premium for the coverage
Coinsurance Clause - ANSWER-Look for a policy with full coverage, rather
than a coinsurance clause, where you have
to pay for part of a loss if under-insured.
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