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Exam 10: Managing Property and Liability Risk

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Question 51

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Andy and Ann live in a home with a replacement value of $164,000 and a market value of $175,000.In most cases,what is the minimum amount of homeowner's coverage they must carry to meet the replacement-cost requirement?

A) ​$140,000
B) ​$175,000
C) ​$164,000
D) ​$131,200

E) None of the above
F) A) and D)

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Question 52

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The cost of a $1 million professional liability policy would vary slightly regardless of the profession of the policy buyer.

A) True
B) False

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Question 53

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The financial product used for transferring and reducing risk by having a large number of people share in the financial losses suffered by members of the group is called​

George and Kelly have a renter's policy with $1,000 per person no-fault medical payments coverage.Following a party at their home,Brian,one of their guests,fell on the stairs and broke his ankle.How much of the $1,850 medical bills will George and Kelly's renter's policy pay?

A standard homeowner's insurance policy provides protection from various types of property losses such as damage to all except

The law of large numbers increases risk for the insurance company.

Homeowner's insurance can pay for additional expenses such as temporary lodging and food as well as for repairing or replacing property.

If you have an insurance policy with a $300 deductible and 30 percent coinsurance,you would pay 30 percent of your insured loss plus $300.

Theft damage is the most common peril for physical damage to automobiles.

Automobile insurance combines property and liability coverage into a single policy.

Connie and Sam's detached garage was recently destroyed by a tornado.Their house was insured for $135,000,and the detached structures coverage was 10 percent of the insured value of the home.The loss to the garage was valued at $15,000.The insurance company would pay ____ less the deductible on this loss.

A risk transfer is any arrangement where an insurance company agrees to reimburse you for a financial loss.

Which of the following perils is not covered under any of the standard homeowner's forms?

All states require automobile owners to purchase automobile insurance and to take financial responsibility for an accident that might occur.

The contract between the person buying the insurance and the company providing the insurance is the

Uninsured motorist coverage is not recommended because it is expensive and state laws require all drivers to carry liability insurance.

When you sign a release,you are affirming ​

The HO-6 form is especially written to meet the needs of condominium owners.

Insurance companies often limit or deny coverage if a loss occurs as a result of a ____ hazard.

Deductibles are requirements that the insured pay an initial portion of any loss.