Insurance / Risk Management Quiz

1.

Define what Insurance is....

2.

Which of the following is NOT an identified type of insurance?

A.

Property
B.

Auto mobile
C.

Education
D.

Health

Correct Answer
C. Education

Explanation
Education is not typically considered a type of insurance. Property insurance covers damage or loss to property, automobile insurance covers damage or loss to vehicles, and health insurance covers medical expenses. However, education is not typically associated with insurance as it is not a tangible asset that can be insured against damage or loss.

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3.

Homeowner's Insurance covers all EXCEPT?

A.

Theft and Vandalism coverage
B.

Party coverage
C.

Hurricane coverage
D.

Liability coverage

Correct Answer
B. Party coverage

Explanation
Homeowner's insurance typically provides coverage for various risks and damages to a home and its contents. Theft and vandalism coverage, hurricane coverage, and liability coverage are all commonly included in a standard homeowner's insurance policy. However, party coverage is not typically covered by homeowner's insurance. This is because parties can involve a higher risk of accidents, property damage, and liability claims, which may require additional specialized insurance coverage. Therefore, the correct answer is party coverage.

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4.

It is better to need and not have insurance !

A.

True
B.

False

Correct Answer
B. False

Explanation
Having insurance is always beneficial as it provides financial protection in case of unexpected events or emergencies. It ensures that individuals or businesses are not left with a large financial burden. Therefore, it is not better to need insurance and not have it, as it leaves one vulnerable to potential financial hardships.

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5.

To drive a vehicle in the state of Virginia, you MUST have of which of the following types of insurance?

A.

Comprehensive
B.

Collision
C.

Uninsured Motorist
D.

Liability

Correct Answer
D. Liability

Explanation
In order to drive a vehicle in the state of Virginia, it is mandatory to have liability insurance. Liability insurance provides coverage for damages or injuries caused to other people or their property in an accident where the insured driver is at fault. This type of insurance ensures that the driver is financially responsible for any harm they may cause while driving.

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6.

If your claim for an accident is $400,000 and your insurance policy is worth $250,000 you are what is called_______________________

Correct Answer
underinsured

Explanation
If your claim for an accident is $400,000 and your insurance policy is worth $250,000, it means that your insurance coverage is insufficient to fully cover the cost of the accident. In this situation, you are considered underinsured because there is a gap of $150,000 between the claim amount and the policy value. Being underinsured means that you may have to pay out of pocket for the remaining amount, or seek additional coverage to cover the shortfall.

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7.

For automobile insurance...you pay all EXCEPT which of the following

A.

State inspection cost
B.

Deductible cost
C.

Premium cost
D.

Extended cost

Correct Answer
A. State inspection cost

Explanation
Automobile insurance includes various costs that policyholders are responsible for. These costs typically include the deductible, premium, and any additional fees or charges. However, the state inspection cost is not typically covered by automobile insurance. State inspections are typically required by law to ensure that vehicles meet certain safety and emissions standards, and the cost of these inspections is typically the responsibility of the vehicle owner rather than the insurance company.

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8.

Your finance history (credit report) can impact the rate or amount you pay for automobile insurance?

A.

True
B.

False

Correct Answer
A. True

Explanation
Your finance history, specifically your credit report, can indeed impact the rate or amount you pay for automobile insurance. Insurance companies often use credit-based insurance scores, which are derived from information in your credit report, to determine the likelihood of you filing a claim. Studies have shown that individuals with lower credit scores tend to file more claims, leading insurance companies to charge higher premiums to those with poor credit. Therefore, it is important to maintain a good credit history to potentially secure lower insurance rates.

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9.

Health Insurance will pay for _______________ expenses

Correct Answer
medical

Explanation
Health insurance is designed to cover medical expenses. This includes costs related to doctor visits, hospital stays, surgeries, medications, and other necessary medical treatments. By having health insurance, individuals can receive financial assistance for their medical bills, reducing the burden of healthcare costs. Therefore, the correct answer is "medical."

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10.

Which of the following is NOT a form of long-term insurance?

A.

Disability
B.

Automobile
C.

Life
D.

Workers' Compesation

Correct Answer
B. Automobile

Explanation
Automobile insurance is not considered a form of long-term insurance because it primarily covers damages and liabilities related to vehicles, such as accidents, theft, and property damage. Long-term insurance, on the other hand, refers to insurance policies that provide coverage for an extended period, typically years or even decades, and are designed to protect against specific risks over a longer period of time. Disability, life, and workers' compensation insurance are examples of long-term insurance as they provide coverage for disabilities, death, and workplace injuries respectively, over an extended period.

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11.

The main purpose of Disability Insurance is to______________

Correct Answer
replace your income if you are ill or cannot work

Explanation
Disability Insurance is designed to provide financial support by replacing your income in case of illness or inability to work. This type of insurance ensures that individuals who are unable to earn a living due to health issues can still receive a portion of their income to cover their expenses and maintain their quality of life. It acts as a safety net, offering protection and financial stability during times of disability or illness.

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12.

Life Insurance policies can be temporary or permanent?

A.

True
B.

False

Correct Answer
A. True

Explanation
Life insurance policies can be both temporary and permanent. Temporary life insurance policies, also known as term life insurance, provide coverage for a specific period of time, such as 10, 20, or 30 years. These policies are typically more affordable and offer a death benefit if the insured passes away during the term. On the other hand, permanent life insurance policies, such as whole life or universal life insurance, provide coverage for the entire lifetime of the insured. These policies not only offer a death benefit but also accumulate cash value over time, which can be accessed by the policyholder. Therefore, the statement "Life Insurance policies can be temporary or permanent" is true.

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13.

What type of value would an insurer pay if your property becomes damaged, lost or stolen?

A.

New value
B.

Premium value
C.

Reimbursement value
D.

Replacement value

Correct Answer
D. Replacement value

Explanation
When an insurer pays for a damaged, lost, or stolen property, they would typically pay the replacement value. This means that they would cover the cost of replacing the item with a brand new one of similar kind and quality. The replacement value takes into account the current market value of the item, ensuring that the policyholder can replace their property without incurring any additional expenses.

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14.

What is NOT found within an insurance document?

A.

Declaration page
B.

Conditions page
C.

Payment page
D.

Endorsement page

Correct Answer
C. Payment page

Explanation
The payment page is not typically found within an insurance document. Insurance documents usually include a declaration page, which provides an overview of the policy, a conditions page that outlines the terms and conditions, and an endorsement page that contains any modifications or additions to the policy. However, the payment details are usually not included within the insurance document itself, as they are typically handled separately through billing statements or payment receipts.

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15.

My car has been vandalized (thief stole or damaged car) OR my home was damaged by a storm OR a family member was in the hosptial for surgery; before the insurance comapany will pay the bill I must submit a ________

Correct Answer
claim

Explanation
In order for the insurance company to pay the bill for the car vandalism, home damage, or hospital expenses, the individual must submit a claim. This claim serves as a formal request for the insurance company to cover the costs associated with the incident or situation.

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