Homeowners and Auto Insurance Review

1. Piper is willing to pay a high premium for their disability insurance. What are the likely outcomes of paying that higher premium?

• They receive a low deductible and a low monthly payment
• They receive a low deductible and a low coverage limit
• They receive a low deductible and a high coverage limit
• They receive a low deductible and a high risk assessment

2. Why is risk pooling essential for the insurance industry to exist?

• Risk pooling eliminates everyone who files expensive claims and makes them uninsurable
• Risk pooling creates large groups to spread the risk level out while maximizing the amount of premiums that can be collected
• Risk pooling provides every insured person with a monthly check, called a premium, so they can pay whatever bills they need
• Risk pooling is a low-cost way for everyone to save their premiums in a saving account to use later

3. Karishma has a renters insurance policy with a coverage limit of $25,000. While she’s on vacation a fire breaks out, ruining $9,000 worth of possessions before the fire department puts it out. Her deductible is $500. How much will Karishma and the insurance company each pay?

• Karishma pays $0, while the insurance company pays $500
• Karishma pays $0, while the insurance company pays $9,000
• Karishma pays $500, while the insurance company pays $8,500
• Karishma pays $500, while the insurance company pays $24,500

1. Ralph has a shiny new car, and he wants to make sure the insurance company will help him fix or replace it in case of any type of damage. Each of these coverage areas will provide the type of coverage he’s looking for on his car EXCEPT…

• Uninsured/underinsured motorist
• Collision
• Comprehensive
• Liability

If you drive a fancy car a lot of miles each month, your premiums will likely be…

• Lower than expected compared to another driver with the same driving record but a cheaper car
• The same as for another driver with the same driving record but a cheaper car
• Higher than expected compared to another driver with the same driving record but a cheaper car
• Unchanged, because all drivers pay the exact same premium based on federal law

3. Bodily injury liability coverage provides coverage in which scenario?

• The insured driver causes an accident where another person is injured
• The insured driver causes an accident where another’s property is damaged
• The insured driver is a victim of an accident and needs to replace their own car
• The insured driver is a victim of an accident and needs to pay their own medical bills

1. Each of these coverage areas is part of a standard renters insurance policy EXCEPT for…

• Loss of use
• Personal Property
• Liability
• Dwelling

2. What is the liability portion of a homeowners insurance policy meant to cover?

• The cost of a lawsuit if someone sues you for injuries they got on your property
• The cost of repairing the physical structure of your home
• The cost of floods and earthquakes not covered by a standard policy
• The cost of replacing personal property that you, yourself, damage within your home

3. Which college student is MOST likely to need their own renters insurance policy?

• Abigail, who lives with her parents and commutes to college
• Beatrice, who is a freshman living in a dorm and whose mom has homeowners insurance
• Carson, who is a senior living in a dorm and whose guardians have homeowners insurance
• Dani, who lives in an off-campus apartment with her cousin and a friend