Chapter 4 Pretest

Front

What is a deductible in automobile insurance?

Back

A deductible is the amount a policyholder must pay out of pocket before the insurance company pays for a covered loss.

Front

What does personal injury protection (PIP) cover?

Back

PIP covers medical expenses for you and your passengers, regardless of who is at fault in an accident.

Front

How do you calculate sales tax on a purchase?

Back

Sales tax can be calculated by multiplying the purchase price by the sales tax rate (e.g., Sales Tax = Purchase Price × Sales Tax Rate).

Front

If a car costs $48,668 and the sales tax rate is 6%, how much is the sales tax?

Back

The sales tax is $2,920.08, calculated as 0.06 × 48668.

Front

What is the total cost of a car including sales tax if the car costs $48,668 and the sales tax is $2,920.08?

Back

The total cost is $51,588.08, calculated as $48,668 + $2,920.08.

Front

What happens if property damage exceeds the insurance coverage?

Back

The policyholder must pay the difference out of pocket.

Front

If Gary has $10,000 in property damage insurance and causes $12,000 in damage, how much does he pay?

Back

Gary pays $2,000 out of pocket after the insurance covers $10,000.

Front

What is the formula to find the amount paid after insurance for property damage?

Back

Amount Paid = Total Damage - Insurance Coverage.

Front

What is the purpose of automobile insurance?

Back

Automobile insurance provides financial protection against physical damage and bodily injury resulting from traffic collisions.

Front

What is the difference between liability insurance and comprehensive insurance?

Back

Liability insurance covers damages to others if you're at fault, while comprehensive insurance covers non-collision-related damages to your own vehicle.