Understanding Insurance

What event led to the formation of the first insurance company?

• The Great Fire of London

• The Industrial Revolution

• The Black Death

• The American Revolution

What is the primary purpose of pooling premiums in insurance?

• To increase company profits

• To invest in real estate

• To pay for advertising

• To cover policyholders' losses

Why might someone choose a policy with a higher deductible?

• To get faster claim processing

• To have more coverage

• To pay lower monthly premiums

• To avoid paying any premiums

What is a deductible in an insurance policy?

• The amount the insurance company pays

• The monthly premium cost

• The amount you pay before insurance covers losses

• The total coverage amount

How does living in a high-traffic urban area affect car insurance premiums?

• It has no effect

• It increases the premiums

• It lowers the premiums

• It guarantees coverage

What can happen if you file multiple insurance claims?

• Your premiums may decrease

• You may be refused coverage

• You will receive a bonus

• Your coverage will double

What is the relationship between risk and insurance cost?

• Higher risk leads to lower cost

• Higher risk leads to higher cost

• Lower risk leads to higher cost

• Risk does not affect cost

What should you do before selecting an insurance policy?

• Ignore the deductible

• Read the policy carefully

• Select the first policy you find

• Choose the cheapest option

What is a common type of insurance not frequently purchased?

• Health insurance

• Auto insurance

• Home insurance

• Flood insurance

Why is it important to document damage when making an insurance claim?

• To speed up the process

• To provide proof of loss

• To increase the claim amount

• To avoid paying the deductible