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Finance > Chapter 22 > Flashcards

Chapter 22 Flashcards

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1
Q

Protection against possible financial loss

A

insurance

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2
Q

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

A

policy

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3
Q

a fee for insurance

A

premium

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4
Q

The chance of a loss or injury

A

risk

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5
Q

Anything that may possibly cause a loss

A

peril

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6
Q

Anything that increases the the likelihood of loss through peril

A

hazard

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7
Q

Lack of attention

A

negligence

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8
Q

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

A

deductible

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9
Q

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

A

liability

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10
Q

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

A

homeowners insurance

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11
Q

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

A

personal property floater

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12
Q

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

A

medical payments coverage

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13
Q

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

A

actual cash values

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14
Q

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

A

replacement value

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15
Q

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

A

bodily injury liability

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16
Q

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

A

uninsured motorists protection

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17
Q

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

A

property damage liability

18
Q

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

A

collision

19
Q

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

A

no-fault system

20
Q

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

A

assigned risk pool

21
Q

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

A

Peril

22
Q

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

A

speculative

23
Q

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

A

Reduction

24
Q

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

A

Risk shifting and risk assumption

25
Q

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

A

Guests injure themselves

26
Q

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

A

The building

27
Q

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

A

Lightning

28
Q

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

A

Near fire hydrants

29
Q

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

A

Uninsured motorist protection

30
Q

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

A

Cannot get coverage

31
Q

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

A

hazard

32
Q

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

A

collision

33
Q

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

A

policyholder

34
Q

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

A

umbrella policy

35
Q

_________ is protection against possible financial loss.

A

Insurance

36
Q

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

A

household inventory

37
Q

The chance of loss or injury is called ______.

A

risk

38
Q

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

A

assigned risk pool

39
Q

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

A

no-fault system

40
Q

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

A

peril

Finance (7 decks)

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