Business and Personal Finance © 2007

Chapter 13: Home and Motor Vehicle Insurance

Practice Tests

1
_______ is the failure to take ordinary or reasonable care to prevent accidents from happening.
A)hazard
B)negligence
C)risk
D)liability
2
The set amount that a policyholder must pay per loss on an insurance policy is called a(n) _______.
A)deductible
B)premium
C)liability
D)coverage
3
The legal responsibility for the financial cost of another person's losses or injuries is called _______.
A)negligence
B)liability
C)insurance
D)coverage
4
Liability risks are insurance risks caused by _______.
A)peril
B)hazard
C)negligence
D)natural disasters
5
Buying an insurance policy is an example of _______.
A)risk avoidance
B)risk reduction
C)risk assumption
D)risk shifting
6
The replacement cost of an item minus depreciation is called _______.
A)replacement value
B)deductible
C)actual cash value
D)premium
7
The full cost of repairing or replacing an item is called _______.
A)actual cash value
B)replacement value
C)coverage
D)premium
8
A _______ is additional property insurance that covers the damage or loss of a specific item of high value.
A)household inventory
B)homeowners insurance policy
C)personal catastrophe policy
D)personal property floater
9
Insurance that covers damage to the vehicle of the insured person no matter who is at fault is called _______.
A)uninsured motorist's protection
B)collision
C)bodily injury liability
D)medical payments
10
If a driver receives several traffic tickets, his or her insurance premiums will probably _______.
A)increase
B)decrease
C)stay the same
D)increase by $10 per year for each ticket received
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