Answers26-27 Ignite Financial Literacy Personal Finance - EL3403Auto Insurance

Auto Insurance Answers

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21
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Which of the following is not a reason young drivers have higher auto insurance premiums than older drivers?

A
A very high percentage of teen deaths have been the result of motor vehicle crashes.
B
A very high percentage of teenage drivers have had an accident in the first year of receiving a license.
C
Accidents involving teenage drivers have resulted in billions of dollars of medical expenses and property damage in recent years.
D
Accidents involving teenage drivers have required additional investigation, the cost of which is passed on to the driver in the form of a higher premium.
22
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Tracy was involved in an accident in which the other driver suffered severe injuries. The police determined that the accident was Tracy’s fault. Tracy is fully insured through her insurance company. Which of the following components of Tracy’s insurance policy will cover the injuries of the other driver?

A
bodily injury
B
property damage
C
collision
D
comprehensive damage
23

Which of the following is not considered one of the four basic types of auto insurance?

A
Collision
B
Bodily Injury
C
Property Damage
D
Legal Responsibility
24

Susie is thinking about changing her auto insurance policy at Fret-No-More Auto Insurance. Her current policy includes the following options: $50/100,000 limit for bodily injury, $25,000 limit for property damage, $250 deductible for collision, and $50 deductible for comprehensive. Which of the following changes would increase Susie’s limits the most without increasing her monthly premium by more than $5.00? Fret-No-More Auto Insurance Type of Insurance Coverage Coverage Limits Annual Premiums Bodily Injury $25/50,000 $21.35 $50/100,000 $32.78 $100/300,000 $42.10 Property Damage $25,000 $115.50 $50,000 $142.44 $100,000 $193.78 Collision $100 deductible $490.25 $250 deductible $343.33 $500 deductible $248.08 Comprehensive $50 deductible $105.79 $100 deductible $88.23

A
Increase coverage on bodily injury to $100/300,000.
B
Increase coverage on property damage to $50,000.
C
Increase coverage on bodily injury to $100/300,000 and on property damage to $50,000.
D
Increase coverage on bodily injury to $100/300,000 and on property damage to $100,000.
25

Which of the following statements is not something you should be thinking when considering changes in your auto insurance policy?

A
Higher deductibles mean lower premiums but more out-of-pocket expense in the event of an accident.
B
The premium you pay guarantees that you will never have to pay more than your deductible in the event of an accident.
C
The more types of insurance you include in your policy, the more protected you are from financial loss in the event of an accident.
D
Lower coverage limits mean lower premiums but more restrictions on the insurance company when covering injuries and damage resulting from an accident.
26

What is the basic difference between liability insurance and collision insurance?

A
Liability insurance covers only medical injuries, and collision insurance covers only property damage.
B
Liability insurance covers damage that you cause, and collision insurance covers damage done to your vehicle.
C
Liability insurance is optional, but most states require collision insurance.
D
Liability insurance protects against theft or vandalism, and collision insurance covers against accidents or crashes.
27

After being involved in a car accident last month, Ralph’s insurance company has increased his annual premium by $105.38. Approximately what change will Ralph see on his future monthly statements as a result of the change?

A
Ralph’s monthly insurance payment will not change.
B
Ralph’s monthly insurance payment will increase by $8.78.
C
Ralph’s monthly insurance payment will increase by $17.56.
D
Ralph’s monthly insurance payment will increase $105.38.
28

What is no-fault insurance?

A
No-fault insurance provides full coverage for the entire car.
B
No-fault insurance covers only damages that you did not cause.
C
No-fault insurance is the default insurance that all drivers receive if they do not wish to purchase a special policy.
D
No-fault insurance covers medical expenses incurred after an accident, regardless of which driver caused the crash.
29

After reviewing her driving record for the past 3 years, Cindy’s insurance company offers her a good driver discount of 4.5%. Her original policy was based on the premiums listed below. What is her new annual premium including the discount?Cindy's Auto Insurance PolicyType of Insurance CoverageCoverage LimitsAnnual PremiumsBodily Injury $50/100,000$31.75 Property Damage$25,000 $120.50 Collision$500 deductible$275.75 Comprehensive$100 deductible$100.00

A
$504.24
B
$523.50
C
$528.00
D
$551.76
30

Which of the following is not considered one of the four basic types of auto insurance?

A
Collision
B
Bodily Injury
C
Property Damage
D
Legal Responsibility

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