Chapter 20 Test Review

All states have some type of financial responsibility law to protect the public from financial loss caused by drivers.

• True

• False

Automobile insurance is very inexpensive, so you should always buy as much coverage as possible.

• True

• False

Property permanently attached to land, such as a house or garage, is called real property.

• True

• False

Some insurance companies will pay the current replacement value for property only if the property is insured for at least 80 percent of the replacement value.

• True

• False

The need for life insurance normally declines as children become independent and other savings and investments grow.

• True

• False

Bodily injury liability auto insurance covers all of the following EXCEPT

• the policyholder

• pedestrians

• passengers with the policyholder

• people in other cars

Insurance that protects a car owner against financial loss resulting from a wreck or rollover is called

• comprehensive coverage.

• underinsured motorist coverage

• collision coverage.

• deductible coverage

With an assigned-risk plan,

• the insured pay much lower premiums than in other types of plans.

• low-risk drivers are assigned high-risk drivers to tutor in good driving practices.

• insurance companies can refuse to sell insurance to all high-risk drivers

• even high-risk drivers are able to obtain at least some automobile insurance.

Which of the following perils is covered by the basic form of a homeowners policy?

• explosion

• windstorm hail

• theft

• all of the above

Rebekka’s ten-year-old couch was destroyed in a fire. Her insurance company paid her the cost of buying a brand-new couch. This indicates that Rebekka had purchased

• replacement insurance

• depreciation insurance

• liability insurance

• basic homeowners insurance