Personal Finance CH 11 Homeowners & Auto Insurance

What is a deductible in insurance?

• Amount policyholder pays after insurance coverage kicks in

• Amount policyholder must pay before insurance coverage kicks in.

• Amount policyholder receives from insurance company

• Amount policyholder pays to renew insurance policy

Explain the concept of coverage limits in insurance.

• Coverage limits in insurance only apply to certain types of insurance policies.

• Coverage limits in insurance are the minimum amount an insurance company will pay for a covered loss.

• Coverage limits in insurance refer to the deductible amount paid by the policyholder.

• Coverage limits in insurance refer to the maximum amount an insurance company will pay for a covered loss.

How are premiums determined in homeowners and auto insurance?

• Premiums in homeowners and auto insurance are determined based on factors such as the insured property's value, location, the policyholder's driving record, credit score, age, gender, and coverage limits.

• Premiums are determined by the weather on the day of purchase

• Premiums are determined by flipping a coin

• Premiums are determined solely based on the policyholder's age

What are the different types of policies available for homeowners and auto insurance?

• Travel insurance

• Health coverage

• Liability coverage, comprehensive coverage, collision coverage, personal injury protection, uninsured/underinsured motorist coverage, etc.

• Life insurance

Describe the claims process in the context of insurance.

• Paying for damages out of pocket without involving the insurance company

• Contacting the police, waiting for their report, and then submitting a claim

• The claims process in insurance involves notifying the insurance company, submitting a claim form, investigation, assessment, and reimbursement.

• Skipping the investigation process and directly receiving reimbursement

What are exclusions in insurance policies?

• Exclusions in insurance policies are situations that are always covered by the insurance policy.

• Exclusions in insurance policies are items that are covered by the insurance policy without any limitations.

• Exclusions in insurance policies are conditions that increase the coverage of the insurance policy.

• Exclusions in insurance policies are specific situations, conditions, or items that are not covered by the insurance policy.

How does the deductible amount affect the premium?

• The deductible amount has no impact on the premium

• The deductible amount decreases the premium

• The deductible amount increases the premium significantly

• The deductible amount affects the premium by influencing the cost of the insurance policy.

What happens if a claim exceeds the coverage limits?

• The policyholder will not be responsible for any costs

• The insurance company will only pay up to the specified limit, and the policyholder will be responsible for covering the remaining costs.

• The claim will be automatically denied

• The insurance company will pay double the coverage limit

Differentiate between actual cash value and replacement cost coverage.

• Actual cash value and replacement cost coverage are the same thing.

• Actual cash value considers depreciation, while replacement cost coverage does not.

• Actual cash value does not consider depreciation, while replacement cost coverage does.

• Actual cash value includes replacement cost coverage, while replacement cost coverage does not.

What are some common exclusions in homeowners and auto insurance policies?

• Natural disasters, vandalism, acts of terrorism

• Intentional damage, acts of war, nuclear accidents, and normal wear and tear

• Pet damage, mold, theft

• Negligence, floods, earthquakes