Basics of Insurance Quiz

What is the main purpose of insurance?

• To guarantee a profit for policyholders

• To protect against financial loss from unexpected events

• To eliminate all financial risk

• To invest money and earn interest

What is a premium in an insurance policy?

• The amount you pay for coverage

• The amount an insurance company pays after a claim

• The amount you pay before insurance covers a claim

• The cost of damage from an accident

What is a deductible?

• The amount an insurance company pays for a claim

• The amount you must pay before your insurance covers the rest

• The total amount paid in premiums per year

• A discount given for safe driving

How does having a higher deductible affect an insurance policy?

• It increases the monthly premium

• It lowers the monthly premium

• It eliminates the need for a deductible

• It means you don’t have to pay anything out of pocket

Which of the following is NOT a common type of insurance?

• Auto insurance

• Health insurance

• Grocery insurance

• Homeowners insurance

What type of auto insurance covers damage to your own car caused by an accident?

• Liability

• Collision

• Comprehensive

• Uninsured motorist

What type of auto insurance is legally required in most states?

• Liability

• Collision

• Comprehensive

• Personal injury protection

If a tree falls on your car during a storm, which type of auto insurance would cover the damage?

• Collision

• Liability

• Comprehensive

• Medical payments

What is the purpose of uninsured/underinsured motorist coverage?

• To pay for damages if you cause an accident

• To cover medical expenses after an accident

• To protect you if an at-fault driver doesn’t have enough insurance

• To pay for routine car maintenance

If you cause an accident that damages another person’s car, which part of your insurance would pay for their repairs?

• Collision

• Comprehensive

• Liability

• Personal injury protection