Car Insurance Test

1.

What is: Insurance that pays for the cost of injuries to people involved in an accident and protects the insured against financial loss from lawsuits and other legal expenses incurred as a result of an accident. There are two limits: the maximum that will be paid to any one person and the maximum for each accident.

A.

Medical Payment Coverage
B.

Bodily Insurance Liability
C.

"No Fault" Insurance

Correct Answer
B. Bodily Insurance Liability

Explanation
Bodily Insurance Liability is the correct answer because it refers to an insurance coverage that pays for the cost of injuries to people involved in an accident. It also protects the insured against financial loss from lawsuits and other legal expenses resulting from an accident. This coverage has two limits: one for the maximum amount that will be paid to any one person and another for the maximum amount per accident.

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2.

What is: Insurance that pays the medical expenses and the cost of health care of those in the insured's automobile that were injured, including the insured.

A.

Medical Payment Coverage
B.

Collision
C.

Bodily Insurance Liability

Correct Answer
A. Medical Payment Coverage

Explanation
Medical Payment Coverage is an insurance policy that covers the medical expenses and healthcare costs of individuals who were injured in the insured's automobile, including the insured themselves. This coverage is specifically designed to provide financial assistance for medical treatments and services related to injuries sustained in a car accident. It helps to alleviate the burden of medical expenses and ensures that necessary healthcare is accessible to those involved in the accident.

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3.

What is: Insurance that protects against financial loss, within limits, when the insured damages the property of others. This primarily applies to vehicles but could also include street signs, lampposts, and buildings.

A.

Collision
B.

Comprehensive
C.

Property Damage Liability

Correct Answer
C. Property Damage Liability

Explanation
Property Damage Liability is the correct answer because it refers to insurance that covers the insured when they cause damage to someone else's property. This type of insurance is commonly associated with vehicles, but it can also include other types of property such as street signs, lampposts, and buildings. Collision insurance covers damages to the insured's own vehicle in the event of a collision, while comprehensive insurance covers damages to the insured's vehicle caused by events other than collisions, such as theft or natural disasters. However, neither of these options specifically addresses the protection against financial loss when damaging the property of others, making Property Damage Liability the most appropriate choice.

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4.

What is: Insurance that covers the cost of injuries to the insured and his or her family if the insured is in a "hit and run" accident or in an accident with someone that does not have insurance, or when the other driver does not have adequate coverage for the damage caused to the insured.

A.

Collision Physical Damage
B.

Uninsured Motorist's protection
C.

"No Fault" Insurance

Correct Answer
B. Uninsured Motorist's protection

Explanation
Uninsured Motorist's protection is the correct answer because it refers to insurance that covers the cost of injuries to the insured and their family in specific situations such as a "hit and run" accident or an accident with someone who does not have insurance. It also covers cases where the other driver does not have sufficient coverage for the damage caused to the insured. This type of insurance provides financial protection and ensures that the insured is not left with the burden of expenses in such situations.

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5.

What is: A program in which an insured can collect medical expenses, lost wages and injury costs from their insurance company, as a means to expedite paying for damages until the process of determining fault is complete.

A.

"No Fault" Insurance
B.

Assigned Risk Pool
C.

Collision

Correct Answer(s)
A. "No Fault" Insurance
B. Assigned Risk Pool

Explanation
A "No Fault" Insurance is a program in which an insured can collect medical expenses, lost wages, and injury costs from their insurance company, regardless of who is at fault for the accident. This type of insurance is designed to expedite the payment for damages until the process of determining fault is complete. On the other hand, an Assigned Risk Pool is a program that provides insurance coverage to individuals who are unable to obtain insurance in the regular market due to high-risk factors. Collision refers to insurance coverage that pays for damages to the insured's vehicle in the event of a collision with another vehicle or object.

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6.

What is: Individuals unable to obtain insurance due to a poor driving record or accident, obtain insurance-albeit at high rates-through a state program whereby insurance companies must accept some such drivers.

A.

Comprehensive
B.

Collision
C.

Assigned Risk Pool

Correct Answer
C. Assigned Risk Pool

Explanation
The given passage describes a situation where individuals with a poor driving record or accident history are unable to obtain insurance. However, they can still obtain insurance through a state program called the assigned risk pool. This program requires insurance companies to accept these high-risk drivers and provide them with insurance, although at high rates. Therefore, the correct answer is Assigned Risk Pool.

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7.

A _____________ owns the insurance company.

Correct Answer
Policy Holder, policyholder

Explanation
A policyholder is the individual or entity that owns an insurance policy. They are the ones who purchase the insurance coverage and are entitled to the benefits and protection provided by the insurance company. The policy holder is responsible for paying the premiums and complying with the terms and conditions of the policy.

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8.

A contract of insurance between an insurance company and the policy holder is a ___________.

Correct Answer
Insurance policy, policy

Explanation
An insurance policy is a contract between an insurance company and the policyholder. It outlines the terms and conditions of the insurance coverage, including the types of risks covered, the premium to be paid, and the duration of the coverage. The policyholder agrees to pay the premium, while the insurance company agrees to provide financial compensation in case of covered losses or damages. Therefore, an insurance policy is the correct answer as it accurately describes the contractual agreement between the insurance company and the policyholder.

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9.

A(n)__________ is covered by an insurance policy.

Correct Answer
insured

Explanation
The term "insured" refers to a person or entity that is protected by an insurance policy. In this context, the word "insured" is the correct answer as it directly relates to the subject of the sentence, which is something that is covered by an insurance policy.

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10.

The amount the insured must pay before financial benefits are paid by the insurance company is called the ______________.

Correct Answer
Deductible

Explanation
The deductible is the amount that the insured individual is responsible for paying out of pocket before the insurance company starts providing financial benefits. This is a common feature in insurance policies, designed to share the financial burden between the insured and the insurer. By having a deductible, insurance companies can reduce the number of small claims and discourage unnecessary or frivolous claims. The deductible amount varies depending on the insurance policy and can be set at a fixed dollar amount or a percentage of the total claim.

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11.

The cost of the insurance policy is called the _____________.

Correct Answer
Premium

Explanation
The cost of an insurance policy is referred to as the premium. It is the amount of money that policyholders pay to the insurance company in exchange for coverage. The premium can be paid in various ways, such as monthly, quarterly, or annually, and it is determined based on factors like the type of insurance, coverage limits, deductibles, and the insured individual's risk profile. The premium is essential for the insurance company to cover the costs of claims, administrative expenses, and profit.

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12.

Insurance that pays for the damage to the uninsured's automobile, regardless of whether the insured caused the accident is called ____________.

Correct Answer
Collision

Explanation
Collision insurance is a type of auto insurance that pays for the damage to the insured's automobile in the event of a collision, regardless of who caused the accident. It covers the cost of repairs or replacement of the insured vehicle, providing financial protection to the policyholder. This type of insurance is particularly useful for uninsured individuals, as it ensures that their vehicle is protected in case of an accident, even if they are at fault.

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13.

Insurance that provides financial protection against loss from the damage caused by something other than collision, such as fire, theft, and vandalism is called _______________.

Correct Answer
Comprehensive Physical Damage

Explanation
Comprehensive Physical Damage insurance provides financial protection against loss from damage caused by something other than collision, such as fire, theft, and vandalism. This type of insurance covers a wide range of risks and is commonly purchased by vehicle owners to protect their vehicles from non-collision related damages.

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14.

Car Insurance Test

What is: Insurance that pays the medical expenses and the cost of health care of those in the insured's automobile that were injured, including the insured.

What is: Insurance that protects against financial loss, within limits, when the insured damages the property of others. This primarily applies to vehicles but could also include street signs, lampposts, and buildings.

What is: Insurance that covers the cost of injuries to the insured and his or her family if the insured is in a "hit and run" accident or in an accident with someone that does not have insurance, or when the other driver does not have adequate coverage for the damage caused to the insured.

What is: A program in which an insured can collect medical expenses, lost wages and injury costs from their insurance company, as a means to expedite paying for damages until the process of determining fault is complete.

What is: Individuals unable to obtain insurance due to a poor driving record or accident, obtain insurance-albeit at high rates-through a state program whereby insurance companies must accept some such drivers.

A _____________ owns the insurance company.

A contract of insurance between an insurance company and the policy holder is a ___________.

A(n)__________ is covered by an insurance policy.

The amount the insured must pay before financial benefits are paid by the insurance company is called the ______________.

The cost of the insurance policy is called the _____________.

Insurance that pays for the damage to the uninsured's automobile, regardless of whether the insured caused the accident is called ____________.

Insurance that provides financial protection against loss from the damage caused by something other than collision, such as fire, theft, and vandalism is called _______________.

What is the primary purpose of liability coverage in car insurance?