Chapter 22 Flashcards
Protection against possible financial loss
insurance
Contract between an insurance company and a person by which that person joins a risk-sharing group
policy
a fee for insurance
premium
The chance of a loss or injury
risk
Anything that may possibly cause a loss
peril
Anything that increases the the likelihood of loss through peril
hazard
Lack of attention
negligence
The set amount that the policyholder must pay per loss on an insurance policy
deductible
Legal responsibility for the financial cost of another person’s losses or injuries
liability
Coverage that provides protection for a residence and its associated financial risks, such as property damage and injuries to others
homeowners insurance
Additional property insurance that covers the damage or loss of a specific item of high value
personal property floater
Coverage that pays the costs of minor accidental injuries to visitors of the policyholders property
medical payments coverage
Method for settling claims in which the payment received is based on the replacement cost of an item minus depreciation
actual cash values
Method for settling claims in which one receives the full cost of repairing or replacing an item
replacement value
Insurance that covers physical injuries caused by a vehicle accident for which one is responsible
bodily injury liability
Insurance that provides coverage for accidents involving an uninsured or hit-and-run driver
uninsured motorists protection
Motor vehicle insurance that applies when one damages the property of others
property damage liability
insurance that covers damage to one’s vehicle when it is involved in an accident
collision
An arrangement whereby drivers who are involved in accidents collect money from their own insurance companies
no-fault system
A group of people who cannot get motor vehicle insurance are assigned to each insurance company operating in the state
assigned risk pool
Which insurance term refers to anything that may cause a loss?
A. Risk
B. Peril
C. Hazard
D. Liability
Peril
A risk that is not insurable is known as a…
A. Pure risk
B. Personal risk
C. Liability risk
D. Speculative risk
speculative
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
Reduction
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
Risk shifting and risk assumption
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
Guests injure themselves
Renters insurance included coverage for all the following items except…
A. The building
B. Personal property
C. Additional living expenses
D. Personal liability
The building
The basic home insurance policy form protects against several perils, including…
A. Sleet
B. Lightning
C. Flood
D. Earthquake
Lightning
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
Near fire hydrants
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
Uninsured motorist protection
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
Cannot get coverage
Defective wiring is an example of a(n) ________ because it increases the likelihood of loss through some peril.
hazard
The type of insurance that covers damage to the insured’s car when it is involved in an accident is _______ insurance.
collision
A(n) __________ is the purchaser of an insurance policy.
policyholder
A(n) __________ supplements basic personal liability coverage and is also called a personal catastrophe policy.
umbrella policy
_________ is protection against possible financial loss.
Insurance
A list or other documentation of personal belongings, with purchase dates and cost information, is a(n) _________.
household inventory
The chance of loss or injury is called ______.
risk
Every state has a(n) ________ which includes all the people who cannot get automobile insurance.
assigned risk pool
Each party involved in an accident collects money from his or her own insurance company under a(n) _______.
no-fault system
Anything that may cause a loss is a(n) _______.
peril
