Question: 1-Karen White has a personal auto policy with coverage limits of 20/40/15. Karen has collision coverage with a $250 deductible. She runs a red light

1-Karen White has a personal auto policy with coverage limits of 20/40/15. Karen has collision coverage with a $250 deductible. She runs a red light and causes an auto accident in which three people are injured. Each of them sues her for $20300 in personal injury and $5000 for vehicle damage (there is no injury to Karen or her car). How much will Karen have to pay out of pocket, and how much will her insurer pay?

Karen pays $5000 and insurer pays $60900

Karen pays $21150 and insurer pays 55650

Karen pays $20900 and insurer pays $55000

Karen pays $0 and insurer pays $65900

2-If the market value of your home is $264000, but the replacement cost of the structure is $192000, how much homeowners insurance should you have?

$264000

$72000

$456000

$192000

3-What is the risk that the physical building will be damaged by perils such as fire, rain, wind, or hail?

Umbrella liability risk

Liability risk

Personal property risk

Real property risk

4-Pricing of homeowners insurance can vary substantially from insurer to insurer but are related to the following factors, except

the amount and type of coverage purchased.

deductibles and discounts.

location and property characteristics.

risk characteristics of the insurer.

5-Liability risk is the risk of being held responsible for

the actions of mother nature.

someone else's losses.

your losses.

the actions of others.

6-To determine the expected loss, multiply the

expected frequency by the expected severity.

probability of frequency by the value of a total loss.

frequency by the loss history.

probability of frequency by the market value of loss.

7-The price an insurer charges a policyholder for insurance protection is called the

insurable interest.

coinsurance.

premium.

copayment.

8-Correlated risks are

risks that affect a large number of policyholders in the same area.

risks that affect a distinct group of policyholders in different areas.

isolated risks that affect a distinct group of policyholders.

a perfect storm of risks that happen at the same time.

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