WorksheetsCar & Home Buying and Insurance
Total questions: 36
Worksheet time: 19mins
Violet's car broke down on the way to work, and her mechanic has told her that the car cannot be fixed. Violet drives 30 miles one way to work each day. There is no reliable bus or train transportation that goes anywhere near her work. Violet decides she needs a car for reliable transportation to work. What step in the car buying process is Violet carrying out?
Problem identification
Evaluating alternatives
Determining the purchase price
Post-purchase activities
Imagine you're renting an apartment in a bustling city. What would your renter's insurance most likely cover?
umbrella liability
flood damage
house and other structures
personal property
Imagine you've just bought a new car. ______ is considered a variable operating cost of this automobile.
Interest on auto loan
Maintenance
Registration fee
Insurance
Ty rides his bicycle to work so that he does not have to worry about getting in a car accident. How is Ty managing his risk?
Reduction
Assumption
Shifting
Avoidance
John is looking to buy a house and is considering a conventional mortgage. This type of mortgage usually has:
a payment cap
equal payments
a variable interest rate
a government guarantee
In the context of driving, negligence is best described as:
common road hazards
vehicle damage
failure to take ordinary or reasonable care while driving
high risk auto insurance coverage
Your home insurance policy has a $500 deductible. If a small fire causes $850 in damages to your home, what amount of the claim would the insurance company pay?
$350
$850
$500
not able to determine from this information
Imagine you're buying a home priced at $300,000. Private Mortgage Insurance (PMI) is usually required if the down payment is less than ______ percent of the purchase price of the home.
15
5
12
20
Imagine a scenario where a teenager, without a driving license, takes their parent's car for a joyride and ends up damaging a neighbor's fence. The parent may be held responsible for the actions of their child because those actions caused financial harm to the neighbor. This principle is known as:
negligence
vicarious liability
self insurance
strict liability
Imagine you've just bought a brand new car. Which of the following will be the largest fixed expense over the first year of ownership?
Registration, license, and fees
Depreciation
Parking
Insurance
Investing in a new technology startup that may either revolutionize the market or fail to attract customers is an example of (a) risk.
Imagine a scenario where a group of individuals decide to live in a building where the units are owned by a nonprofit organization. What is this form of housing called?
Section 8 housing
Social housing
Public housing
Cooperative housing
Imagine Sarah has just taken out an adjustable rate mortgage for her new home. The purpose of a rate cap in her mortgage agreement is to:
Ensure Sarah's monthly payment will never change
Allow Sarah to refinance at any time
Guarantee a fixed interest rate for the life of the loan
Limit how much the interest rate can increase or decrease over time
Which of the following is an insurable risk?
Starting a business
Julian has bought a car with extra safety features, including front and side airbags and antilock brakes. How is Julian managing his risk?
Reduction
Assumption
Avoidance
Shifting
Willy has decided she needs a new car. After doing some research, she has settled for a mid-sized four-door sedan. She likes the Honda Accord and is exploring the features she needs and wants on this car. She is also trying to decide whether she would be better off purchasing a new car, a used car, or leasing a car. She knows that if she purchases it new, it would likely last her for many, many years. On the other hand, a used car would be a lot cheaper. She is not sure a lease is for her because of the mileage requirements. What step in the purchasing process is Willy?
Post-purchase activities
Problem identification
Evaluating alternatives
Determining the purchase price
Shannon owns a home in Tampa, Florida. There was a fire in her home, and she and her family had to move to a hotel until their home could be fixed. What part of her homeowner's insurance policy would cover the cost of the hotel?
Personal liability
House and other structures
Additional living expenses
Personal property
Allen has 15/20/5 auto insurance coverage. One evening, he lost control of his vehicle, hitting a parked car and damaging a storefront along the street. The damage to the parked car was $6,500, and the damage to the store was $15,000. What amount will Allen pay for the total damage?
$0
$16,500
$5,000
$20,000
Imagine you're reviewing your auto insurance policy and you see it's listed as 50/100/25. The 25 in this policy refers to ________ coverage.
medical payments
bodily injury liability
property damage liability
no-fault insurance
Your home insurance policy has a $500 deductible. If a windstorm causes $1,800 of damage to your home, what amount of the claim would the insurance company pay?
$0
$900
$1,300
$1,800
Most insurance policies include deductibles, which are a combination of risk assumption and:
risk shifting
risk avoidance
risk reduction
risk creation
Your home insurance provides for replacement value for personal property losses. A microwave is stolen. It cost $354 two years ago and has an expected life of six years. A comparable microwave costs $459 today. What amount will the insurance company pay?
$118
$177
$406
$459
Cory accidentally collided with a car driven by Everett. It was Cory's fault and Everett was seriously injured and had to spend the night in the hospital. What part of Cory's automobile insurance policy would cover Everett's injuries?
Bodily injury liability
Medical payments coverage
Property damage liability
Collision coverage
Salvadore Dobrarse is a military veteran and has been told by a friend to check out a VA or FHA loan for the purchase of the home he and his wife are interested in. Why should he?
A smaller down payment is required.
Generally, they will pay a lower interest rate.
Veterans are required to obtain this type of mortgage.
All of the above.
A motor vehicle has the following costs: annual depreciation - $1,600; oil changes cost - $180; automobile insurance - $590; license plate costs - $140. What are the total fixed operating costs for this vehicle?
$1,780
$2,510
$2,330
$1,600
On the purchase of a home, one "point" is equal to:
$100.
1% of the amount being financed.
1% of the purchase price.
$1,000.
Jason accidentally hit a utility pole. The cost to repair his car was $2,950, and he has a $500 collision deductible. How much will the insurance company be required to pay for the car repair?
$250
$2,450
$2,950
$1,000
Which of the following would be an advantage of leasing a vehicle?
automatic ownership in the car
unlimited mileage on the car
lease payments are likely to be lower than loan payments
may need to meet certain credit requirements
What is the primary purpose of comprehensive auto insurance coverage?
To cover damages to your vehicle caused by an accident
To cover medical expenses for injuries in an accident
To cover vehicle theft, vandalism, or natural disasters
To cover damages you cause to another person's property
Imagine you own a house. What aspect would a typical homeowner's insurance policy cover?
Depreciation of the house's market value over time
Personal injuries that happen to someone while they are outside your property
Damage to your furniture and electronics inside the house
Fluctuations in the property values of your neighborhood
Imagine you own a property and a car, both insured under standard policies. Under what circumstance might you need umbrella insurance?
When you require coverage for everyday medical expenses
When you need additional coverage beyond your standard policy limits for both your property and car in case of major claims or lawsuits
When you are traveling out of the country with your property and car
When you need coverage for a pet living in your property
Imagine you're buying a car from a dealership. Which warranty ensures that the dealership legally owns the car and has the right to sell it to you?
Express Warranty
Warranty of Merchantability
Warranty of Title
Full warranty
Jamaal recently bought a new coffee maker from a local store. He was not informed about any warranty but later learned that an implied warranty exists for his purchase. An implied warranty exists as a result of:
a stated intent of the seller.
actions by consumers.
the intended use of a product.
a written statement from the manufacturer.
Imagine you bought a new smartphone online, but upon receiving it, you discover it has a manufacturing defect. You contact the seller for a resolution, but you both cannot agree on a solution. You decide to involve a neutral third party to help resolve the dispute. This process is known as:
mediation
arbitration
a class action suit
a small claims suit
Two companies are in a dispute over a contract. The method they choose, involving a third party whose decision is legally binding to resolve the dispute, is known as:
negotiation
mediation
arbitration
cooperative action
An implied warranty of merchantability guarantees that:
the manufacturer must cover all warranty repair costs.
a toaster must toast bread.
a used car must have a radio.
a new car must come with CarPlay.
