Karen's home has a replacement value of $300,000, therefore she is required to insure home for the standard legal minimum requirement of $________________. Assuming she does not purchase any additional coverage beyond the legal minimum, what is the maximum reimbursement she could receive for each of the following:

a. Damage to personal property: ________________

b. Detached buildings: _________________

c. Additional living expenses: __________________

d. No-fault property damage: ______________

Manuel, a 5 year old, split his chin playing outside and is taken to the ER for stitches by his parents. His bill is $3943, and is covered under his parents' policy which has a $500 hospital visit deductible and a coinsurance rate of 20%.

How much reimbursement can his parents expect? ______________

Manuel's fall was unexpected and therefore insurable. This is an example of: (circle/highlight correct answer)

a. Speculative risk

b. Morale hazard

c. Fortuitous loss

d. Physical hazard

e. Moral hazard

Manuel cannot receive more than $3943 in reimbursement. This reflects the: (circle/highlight)

a. Large-loss principle

b. Law of large numbers

c. Principle of indemnity

Because Manuel is young and has no history of medical conditions, he is part of the ________class. (circle/highlight)

a. Preferred

b. A

c. Desirable

Although car insurance is legally required by all states, the coverage provided by different policies can vary dramatically, such that even an "insured" motorist can end up paying large amounts of money out-of-pocket. Consider the following example involving Felix, who has a family auto policy (FAP) that provides liability coverage with limits of 15/ 30/ 15, no medical payment insurance, and uninsured and underinsured motorist coverage with limits of 50/ 100. He has collision and comprehensive auto insurance, both with a deductible of $100. Suppose one day Felix rear-ends a truck when it stops while he is looking down at his radio. Fortunately, he is not badly injured, but the medical bill for his hospital examination amounts to $484. The driver of the truck, a woman named Laura, was unharmed but required a hospital examination costing $864. Laura's insurance company successfully filed a claim against Felix, exercising subrogation rights.

1. Coverage A of Felix's plan will reimburse him with ______ for Laura's medical bills.

a. $0

b. $30,000

c. $864

2. Felix's medical bills are

a. Not covered

b. Covered under Part A

c. Covered under Part B

d. Covered under Part C

Felix's car required only a new bumper, costing $584 to replace. Laura's truck required $3,650 in repairs, and its trailer contained a racehorse valued at $18,000 that fell and broke its legs upon the impact. Felix is therefore liable for the full value of the horse.

1. Felix's liability coverage will also reimburse him for up to ____________ in property damage, so he is responsible for paying _____________ out of pocket.

Which of the following is true regarding damage to Felix's car?

a. It will be fully reimbursed, minus the $100 deductible

b. It will be reimburse up to the difference between his liability coverage and the damage to the other property

c. It is not covered under his policy