Barnaby Is Applying for Insurance for His New Home

question 92

Multiple Choice

Barnaby is applying for insurance for his new home.Which of the following is correct?

• A) He should base the amount of insurance on the price he paid for it.
• B) He should insure the building for 75% of its replacement cost.
• C) He should use the actual cash value method for settling claims to receive the full cost of repairing or replacing his personal belongings.
• D) His personal belongings should automatically be covered with his home at 125% of his home's insured amount.
• E) His policy should automatically increase coverage as construction costs rise.

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Definitions:

Power Factor

A measure of how effectively electrical power is converted into useful work output, with a value ranging from 0 to 1, where 1 indicates maximum efficiency.

Parallel Circuit

An electrical circuit in which components are connected in parallel, resulting in the same voltage across each component but possibly different currents through each.

Inductive Reactance

The resistance offered by an inductor to the flow of alternating current, measured in ohms.

Impedance

The total resistance to the flow of alternating current (AC) in a circuit, comprising both resistive and reactive components, measured in ohms.