Chapter 14 Review Risk Management and Insurance for Homes and Au

Which of the following is another term for a liability risk?

• auto risk

• legal risk

• implied risk

• guaranteed risk

What are the four common methods of risk management?

• avoid, reduce, transfer, assume

• Identify, assess, avoid, transfer

• avoid, assess, assume, analyze

• transfer, reduce, identify, analyze

The _________ is one risk-management tool that can be used to assess risk.

• consumer thought process

• speculative risk assessor

• systematic decision-making process

• insurance assessment system

Homeowners insurance provides what two basic types of coverage?

• liability protection and underinsured coverage

• uninsured privacy and umbrella coverage

• uninsured protection and umbrella coverage

• property protection and liability protection

Which of the following best represents an example of a speculative risk?

• texting while driving

• a tornado touching down

• buying stock in a company

• disability of a family member

Which of the following is true regarding insurance?

• The type and amount of insurance needed varies depending on the person buying it.

• Generally, automobile insurance is included when homeowners insurance is purchased.

• Having insurance guarantees 100% reimbursement in all accidental situations.

• The price of an insurance policy is the only factor to consider when purchasing insurance.

Purchasing insurance is an example of which risk management strategy?

• avoid

• reduce

• transfer

• assume

What is the main purpose of insurance?

• To allow people to do whatever they want without being held accountable.

• To provide protection against specific types of financial losses.

• To eliminate having to pay for anything in the event of an accident.

• To guarantee 100% reimbursement in the event of a loss.

Davis purchased a brand-new television six years ago for $1,200. This year, a fire occurred in his house and damaged his television. If Davis' property is insured for replacement value, what will he likely receive?

• Nothing

• A check for $500, which is the depreciated value

• A check for the amount of a television of comparable quality.

• An exact replacement TV from the manufacturer

Contract that defines the type of losses that are covered, amount of coverage in dollars, and other conditions to which the two parties agree.

• insurance

• insurance settlement

• insurance policy

• no-fault auto insurance