Casualty: Auto Insurance

Hector has his car regularly serviced by the dealership that sold it to him. While his car is being serviced, a mechanic accidentally drops a heavy wrench on the car's hood and dents it. Whose coverage will apply in this case?

Hector's collision coverage the dealer's general liability coverage the dealer's auto liability coverage A: the dealer's garagekeepers coverage

Which of the following correctly describes the difference between uninsured motorists coverage (UM) and underinsured motorists coverage (UIM)?

The two coverages are identical, though the terms may vary from state to state. A: UM applies when the at-fault motorist does not have auto insurance; UIM responds when the at-fault motorist is insured with a liability limit less than the insured's UM/UIM limit. UIM applies when the at-fault motorist does not have auto insurance; UM responds when the at-fault motorist is insured with a liability limit less than the insured's UM limit. UM applies when the at-fault motorist has UM coverage; UIM responds when the at-fault motorist's UM limit is exceeded in paying the injured party.

Sonya's car was stolen and, when the car thief was joyriding, a drunk, uninsured driver ran a red light and broadsided her car. The car thief submitted $10,000 of medical bills to Sonya's personal auto insurer under her uninsured motorists coverage. Is the car thief's claim covered?

Yes, the at-fault driver was uninsured. Yes, the at-fault driver was drunk. A:No, the car thief didn't have reasonable belief of entitlement to drive Sonya's car. No, the driver of the uninsured vehicle was identified.

Nate, a small business owner, bought a delivery van last year from Discount Auto Sales. Since then, he has spent a lot of money to repair the van. When he gets the latest repair bill from Discount, he loses his temper and drives the van through the plate glass window of the dealer's showroom. Will Nate's business auto policy cover Discount's claim for property damage?

Yes, the business auto policy provides coverage for property damage liability. A: No, the expected or intended exclusion will rule out coverage. Yes, but on an excess basis because the dealer's property coverage is primary. No, the contractual liability exclusion will rule out coverage.

Which of the following accidents occurred outside the policy territory on the personal auto policy?

a collision in Nova Scotia, Canada a theft in New York City vandalism in Puerto Rico A: a hit-and-run in Mexico

All of the following are treated as uninsured motor vehicles for purposes of the personal auto policy EXCEPT:

a hit-and-run driver's vehicle an insured vehicle for which its insurer denies coverage a vehicle that does not carry auto liability insurance A: a vehicle that does not carry uninsured motorist coverage

Besides serving as a stand-alone policy, business auto insurance can be included in which of the following?

a personal auto policy (PAP) a personal injury protection (PIP) policy a commercial general liability (CGL) policy A: a commercial package policy

Jane has an older car that is insured, although the policy does not cover physical damage. She buys a new car and wants to include collision and other than collision coverages on the new car. To have her insurer add these coverages, she must ask the insurer to provide this coverage within:

any time during the policy period 15 days 10 days A: 4 days

Trudy is driving her car when it is struck in the rear by Harry. Trudy's insurer pays for the damage to her car, but then files a claim against Harry to recover the amount it paid to Trudy. What provision in Trudy's personal auto policy gives the insurer the right to pursue Harry to recover this amount?

appraisal no benefit to bailee A: subrogation other insurance

Bernice's Bakery has a business auto policy (BAP). The policy shows a symbol 1 designation on the declarations page next to liability coverage. What vehicles are covered for liability insurance on Bernice's Bakery's BAP?

autos owned by the insured trucks owned by the insured non-owned autos A: any auto

Ibey Motors sells used cars. It also repairs cars for its customers. What type of insurance coverage does Ibey Motors need to provide to cover legal liability for vehicles in its care, custody, and control?

business auto liability garage liability A: garagekeepers liability general liability

In 2013, the Insurance Services Office (ISO) introduced the Auto Dealers form as a replacement to the:

business auto policy commercial general liability policy auto liability section of the businessowners policy A: garage policy

Allied Motor Transport Co. and Brothers Cartage Co. agree to use each other's trailers while transporting cargo. While using one of Brothers' trailers, Alliance has an accident that damages the trailer. What coverage does Alliance need to pay for the damage?

business auto policy truckers policy A: trailer interchange coverage inland marine endorsement

Trang is on her way to a job interview when her car breaks down. A tow truck driver is able to fix her car and send her on her way. She pays the bill for roadside labor and submits it to her auto insurer for reimbursement. What coverage on Trang's PAP, if any, makes payment?

collision A: towing and labor costs endorsement other than collision substitute transportation

A company that only provides truck transportation for its own cargo is known as what type of carrier?

common carrier A: private carrier for-hire carrier trucker

Tim doesn't need glass breakage coverage for a motorized, self-propelled camper he uses in his business because the windows are made of plastic. What type of coverage might be more appropriate for him?

comprehensive coverage A: specified causes of loss coverage collision coverage towing and labor coverage

Which of the following losses would be covered under the physical damage section of a garage policy?

damage to a covered auto while being transported 100 miles from the seller to the garage which has purchased it damage to a covered auto while used in an organized race A: damage to a covered auto by vandals while the car is on the garage owner's lot a covered auto's diminution in value after it is repaired from an earlier accident

Uninsured motorists coverage applies to the named insured and family members who are injured by an uninsured motorist. Although Beverly has uninsured motorists coverage, it will NOT apply to:

her resident husband, who is struck while a pedestrian by an auto driven by an uninsured motorist her aunt, who lives with Beverly and is injured when Beverly's car is struck by a car driven by an uninsured motorist her resident husband, who is injured while a passenger in a neighbor's uninsured car A: Beverly, who rear-ends an uninsured motorist

Which part of a personal auto policy (PAP) describes the limit of liability in uninsured motorists (UM) coverage?

insuring agreement A: declarations exclusion page general conditions page

Arbitration is the submission of a dispute to one or more impartial persons for a final and binding decision. With regard to auto insurance, arbitration can be used to resolve disputes involving which coverage?

medical payments property damage A: UM/UIM bodily injury

In states where no-fault auto insurance is available, the personal auto policy (PAP) can be modified to provide first-party benefits for medical expenses, loss of income, funeral expenses, and similar expenses without regard to fault through the:

medical payments provision compulsory benefits provision A: personal injury protection endorsement joint ownership coverage endorsement

A company that transports cargo belonging to others for a fee is known as what type of carrier?

motor carrier trucker private carrier A: carrier for hire

Which of the following persons is NOT an insured on a business auto policy (BAP)?

named insured driver with the permission of the named insured A: driver without the permission of the vehicle's owner party that is liable for the named insured

If the insurer intends to nonrenew personal auto policy (PAP) coverage, it is required to notify the named insured:

no more than 30 days before the policy expires at least 90 days before the policy expires no more than 15 days before the policy expires A: at least 20 days before the policy expires

Atlas Company has a business auto policy with symbol 1 designated for liability coverage. Which of the following types of vehicles would be covered under this symbol?

owned and non-owned autos A: any auto, including owned, non-owned, or hired autos hired and non-owned autos owned autos only

Andrea's son was recently convicted of driving under the influence of alcohol. What endorsement does her auto insurance carrier want to add to her PAP in order to exclude coverage for her son when he's driving?

personal injury protection endorsement extended non-owned coverage A: named driver exclusion joint ownership coverage endorsement

Garage policies can be used to provide insurance to:

service stations, auto dealers, and trailer dealers only A: auto and trailer dealers only parking garages, service stations, auto dealers, and trailer dealers only any retail business that has a parking lot for its customers

Which of the following refers to state laws that require a motorist to have proof of financial responsibility as a condition of registering the auto or complying with mandatory state inspections?

subrogation laws self-appraisal laws no-fault insurance laws A: compulsory insurance laws

Which covered auto symbol is used to designate owned autos on the business auto policy?

symbol 1 A: symbol 2 symbol 3 symbol 4

Muller's Floral Shop uses vans to deliver flowers and is insured with a business auto policy. It wants auto liability coverage on all autos, but medical payments, UM/ UIM, and physical damage coverage only on owned autos. Which symbols does Muller's insurance agent recommend for these coverages?

symbol 2 for all vehicles and coverages symbol 7 for liability on owned vehicles; symbol 4 for medical payments, UM/UIM, and physical damage coverage A: symbol 1 for liability coverage on any auto; symbol 2 for medical payments, UM/UIM, and physical damage coverage on owned autos symbol 7 for liability, medical payments, UM/UIM, and physical damage coverages on all owned autos

Regarding the business auto policy (BAP), in addition to symbol 1, what other auto coverage symbol provides non-ownership liability coverage?

symbol 6 symbol 7 symbol 8 A: symbol 9

Jonas leased a brand-new Lexus for three years. What definition in his personal auto policy defines the Lexus after Jonas adds it to his policy?

temporary substitute auto your leased auto private passenger auto A: your covered auto

Which of the following is a "newly acquired auto"?

the named insured's motorcycle A: the named insured's private passenger car the named insured's rental car the named insured's company car

Smith Motors has garagekeepers coverage with a $500 per auto deductible and a $2,500 maximum deductible per loss. Vandals break in and damage ten vehicles, causing $400 in damage to each vehicle for a total loss of $4,000. How much of that total loss will Smith pay as the deductible?

$0 $1,500 A: $2,500 $4,000

Kim was stopped at a red light when she was rear-ended by Paige, who didn't have auto liability insurance. Kim's car sustained $3,000 in damages and she suffered $1,000 of bodily injury. Her uninsured motorists limits of liability are $15,000 per person for bodily injury and $30,000 per accident for bodily injury. How much will her UM coverage pay for her loss?

$0 A: $1,000 $3,000 $4,000

Transportation Expenses coverage provides up to what daily limit of coverage for temporary transportation expenses if a private passenger vehicle is stolen?

$10 A: $20 $100 $250

Abbey's station wagon was stolen on July 6 and she immediately reported the theft to her insurer. Her business auto policy's physical damage coverage will pay for transportation expenses. She immediately rents a replacement auto for $25 a day and keeps it until July 29, when her stolen auto is returned to her. What is the maximum amount her insurer will pay for this transportation expense?

$575 (23 days × $25) $525 (21 days × $25) $460 (23 days × $20) A: $420 (21 days × $20)

What auto symbol is shown on the declarations page of a business auto policy to indicate that only specifically described autos are insured for that coverage?

1 A: 7 A F

Mr. Cooper requires his office manager to use her car to visit the bank and post office on a daily basis. What symbol appears on the declarations page of his business auto policy to provide liability coverage for him when his office manager's car is used for his business?

1 -- Any Auto 7 -- Specifically Described Autos 8 -- Hired Autos Only A: 9 -- Non-owned Autos Only

With a business auto policy (BAP), what symbol needs to appear on the declarations page to provide coverage for the rental cars used by the business?

1 -- Any Auto 7 -- Specifically Described Autos A: 8 -- Hired Autos Only 9 -- Non-owned Autos Only

A leased auto may be listed in the declarations in a personal auto policy (PAP) if it is leased to the named insured under a written contract for at least:

3 months A: 6 months 9 months 12 months

The business auto policy (BAP) uses how many different numerical "symbols" to represent the different types of autos that may be covered?

5 A: 10 9 19

While the business auto policy (BAP) coverage territory is limited to the United States, its territories, Puerto Rico, and Canada, it also covers a private passenger auto that the insured rents anywhere in the world for:

7 days or less 21 days or less A: 30 days or less 60 days or less

Which of the following correctly describes the basic purpose of the MCS-90 endorsement?

? It confirms that the trucker is an approved motor carrier. It confirms that the trucker is a for hire carrier. It certifies that the trucker has completed the required driver safety courses. A: It amends the truckers auto liability policy to comply with requirements of the Motor Carrier Act of 1980.

Regarding the personal auto policy (PAP) limit of liability for losses to vehicles and equipment, what is the most an insurer will pay for permanently installed after-market CB (citizen's band) radio equipment?

A: $1,000 $250 $1,500 $500

With respect to the pollution exclusion under the business auto policy (BAP), in which of the following cases would the BAP cover liability arising from the escape of pollutants?

A: A covered delivery truck discharges diesel fuel into a stream when its fuel tank is ruptured in an accident, resulting in an EPA clean-up of the stream. An insured SUV spills a barrel of cleaning solvent it was transporting from a warehouse to a worksite, requiring extensive cleanup of the surrounding neighborhood. A container of toxic chemicals being transported for an insured falls off the delivery truck and spills across a street intersection, forcing closure of the intersection. A container of herbicide stored in the bed of a covered pickup truck develops a leak which results in the herbicide leaking into the town's sewerage treatment facility.

With respect to the garage policy, which of the following situations would NOT be covered under the liability section?

A: A customer's car on the garagekeeper's lot is damaged by a neighbor's falling tree. A customer slips and falls on a wet floor of the garagekeeper's shop. The brake shoes replaced on a customer's car by the garagekeeper fail and cause a crash. An independent contractor hired by the garagekeeper to repair the shop's ceiling drops a tool, striking and injuring a customer.

Which of the following endorsements, if any, will add coverage for a motorcycle to a personal auto policy (PAP)?

A: Miscellaneous Type Vehicle endorsement Extended Non-owned Coverage endorsement Named Driver endorsement Motorcycles can't be insured on a PAP.

Which of the following correctly describes the premium grace period of a personal auto policy?

A: Personal auto policies do not have a premium grace period. Personal auto policies have a standard 10-day grace period that can be extended upon request by the policyowner. Personal auto policies have a standard 31-day grace period that cannot be extended. Personal auto policies have a premium grace period that varies by state.

Mutual Insurance Co. initially approves auto insurance for Ralph, who admitted on the application to a speeding ticket two years ago. Three months later, Mutual discovers that Ralph got seven speeding tickets in the past two years. Mutual cancels Ralph's insurance. Can it legitimately do so?

A: Yes, the insurer may cancel at any time if the policy was obtained through material misrepresentation. No, because it did not discover the speeding tickets within 60 days. No. If Mutual insured Ralph with one speeding ticket, it cannot cancel the policy for additional speeding tickets. Yes, any more than one speeding ticket is automatic grounds for cancellation.

Mrs. Innes broke her arm when the car she was driving slid on ice and smashed into a tree after being rear-ended. What definition in the personal auto policy is used to describe her broken arm?

A: bodily injury property damage collision personal injury

State laws that restrict an injured party's right to sue another driver under tort law, following a car accident, until a specified threshold of damages is surpassed are called:

A: compulsory no-fault add-on benefits choice states tort threshold

Homer's business owns four vehicles, one of which he uses for business and personal pursuits. Homer does not personally own an auto. What endorsement can Homer add to his business auto policy (BAP) to provide him with auto liability when using non-owned cars for his own personal use?

A: drive other car coverage employees as insureds individual named insured hired autos

Sandy takes her car to an auto dealer to have the oil changed. After changing the oil, the mechanic fails to tighten the lug nut to the oil pan. By the time Sandy arrives home with the car, the oil has leaked out and the engine is damaged. Which coverage of the dealer's garage policy will cover that damage to Sandy's engine?

A: garage operations - other than covered autos garage operations - covered autos auto liability comprehensive

On a business auto policy (BAP), what is symbol 19 used to indicate?

A: mobile equipment subject to compulsory insurance motorcycles motor homes trailers

Mr. and Mrs. Ferreira were injured when their car was rear-ended by a drunk driver. Before they can sue the at-fault driver to recover damages for their injuries, they first must submit their injury claim to their own auto insurer for payment. What type of state law makes this requirement?

A: no-fault insurance laws personal injury protection laws compulsory insurance laws financial responsibility laws

The truckers policy insures motor carriers that operate:

A: only on a "for-hire" basis as a private carrier or as a "carrier for hire" only as a "carrier for hire" only for so-called "outlaw truckers"

Derek takes his car to an auto dealership that loans him a car while his own is being repaired. Derek checks his personal auto policy to see what coverages apply to temporary substitute autos. He learns that a temporary substitute is NOT considered a covered auto for purposes of:

A: physical damage (collision and other-than-collision) coverage liability coverage medical payments coverage uninsured motorists coverage

With the business auto policy, what does an insurer use for a symbol to designate a vehicle that is NOT covered under one of the standard symbols?

A: symbol 10 symbol X symbol 20 symbol 99

Lombard Trucking is party to a contract with Murphy Motors. Each party agrees to exchange trailers with the other during the normal operations of their businesses. In the contact, each party also agrees to hold the other harmless for damage occurring to the other's trailer when in its possession. What type of contract do Lombard and Murphy have?

A: trailer interchange agreement trucker change agreement trailer comprehensive agreement rental agreement

Which of the following is covered by a business auto policy's physical damage provisions?

A: transportation expenses after the theft of an auto covered for comprehensive causes of loss expenses to repair damage to a covered auto due to wear and tear expenses related to a tire that blew out due to excessive heat or speed damage to a car while it competed in a race to benefit a charity

With the business auto policy (BAP), symbol 7 (specifically described autos) covers newly acquired autos only if the insured informs the insurer of the new auto:

A: within 30 days after acquiring it before the end of the current policy period at least seven days after acquiring it anytime between 10 and 21 days after acquiring it

With respect to the business auto policy, what is the difference between hired autos (symbol 8) and non-owned autos (symbol 9)?

Hired autos are commercial vehicles; non-owned autos refers to private passenger vehicles. A: A rental car is a hired auto; an employee's pickup truck used in the business would be a non-owned auto. There is no material difference between them. A hired auto is one owned by an employee that is used in the business; a non-owned auto is one the business rents to conduct its business.

All of the following statements about a no-fault auto insurance system are true EXCEPT:

Injured parties recover damages from their own insurers. Fault is not a consideration when determining whether coverage applies. A: No-fault benefits compensate injured parties for pain and suffering. An injured party is entitled to compensation for actual economic damages.

The garage policy is used to provide insurance to franchised and nonfranchised auto and trailer dealers. When compared to other types of insurance, the garage coverage form has a unique feature. What is it?

It has been in use since the late 1800s. Its premium charge is the least expensive of all commercial insurance policies. A: It combines coverage for general liability, auto liability, auto physical damage, and garagekeepers insurance in a single policy. It offers the simplest terms of coverage.

The business auto policy uses a distinctive approach on the declarations page to indicate the coverages that apply to a specific insured. Specifically, how does the policy indicate this coverage for each vehicle?

It lists covered autos with liability limits and premium charges on a separate sheet. An initial premium is charged for coverage; an audit at the end of the policy period results in a more accurate premium charge. A: Symbols are used to designate the vehicles covered and the coverages that apply. The agent personally inspects the insured vehicles to verify the information the insured provided on the application.

Mrs. Emerson sees her husband kissing another woman in the parking lot at the bank. Overcome with rage, she drives her company car into the couple. How does the business auto policy (BAP) of her employer respond to the liability claim filed by Mrs. Emerson's husband and his lady friend?

It makes payment immediately. It makes payment and then makes Mrs. Emerson pay $1,000. A: It denies payment, citing the intentional injury exclusion. It denies payment, citing the employer's liability exclusion.

How does the business auto policy (BAP) respond when an employee is driving the employer's delivery truck and is involved in an accident that doesn't hurt the driver but does injure a co-worker who is a passenger in the vehicle?

It pays promptly. It pays subject to the deductible. It denies coverage under the contractual liability exclusion. A: It denies coverage under the fellow employee exclusion.

When broken glass is among the damage resulting from the collision of a covered auto, the insured may choose to have the glass breakage covered as part of the collision loss. What is the purpose of this provision?

It simplifies the claim process. A: It allows the insured to avoid paying separate comprehensive and collision deductibles. It is required by state statute. It is a gesture of goodwill on the part of the insurer.

Uninsured motorists coverage (UM) broadly covers the named insured and family members injured by an uninsured motorist. In which of the following situations would UM coverage NOT apply to Josephine and her family?

Josephine is injured while walking across a street. Josephine is injured while a passenger in her friend's car. A: Josephine's daughter is injured while a passenger in Josephine's uninsured car. Josephine's husband is injured while a passenger in her covered auto.

Lenny's auto insurance company responded to a lawsuit filed against him after he was involved in an accident. The insurer also hired an attorney to represent Lenny in court. For which of the following reasons would Lenny's insurer terminate its defense of the lawsuit?

Lenny was at fault. Lenny was not at fault. A: Lenny didn't like the insurance company's attorney. The insurer paid the limit of liability on Lenny's policy.

Nancy's car is damaged in a collision. While the car is being repaired, she uses a car provided by the dealership where she is having the car repaired. Is the loaned vehicle a covered auto under her personal auto policy (PAP)?

No, it is a non-owned vehicle. A: Yes, as a temporary substitute auto, it is within the meaning of "your covered auto." No, it is a hired auto. Yes, if she bought an endorsement for "drive other car" coverage.

Katherine's auto insurance policy will pay for bodily injury and property damage because a court has determined she is responsible for the injuries and damage. Under what coverage will her policy make payment for the bodily injury and property damage?

Part B - Medical Payments Coverage Part C - Uninsured Motorists Coverage A: Coverage A - Liability Coverage Coverage D - Collision Coverage

Dave is seriously injured when his car is struck in the rear by Phil, an uninsured motorist. Depending on the jurisdiction, uninsured motorists coverage may apply to accidents involving any of the following situations EXCEPT:

Phil does not have liability insurance on the auto involved in the accident. Phil's insurer is insolvent. Phil is a hit-and-run driver who cannot be identified. A: Phil meets the state's financial responsibility laws and will pay Dave's claim himself.

Porter is the named insured in the declarations of a personal auto policy. He lives with his wife, Anne, who also drives the insured auto. Anne is NOT a named insured in the declarations, but Porter understands that, as his spouse, she is also covered by this policy. Which statement is correct if Porter names her in the declarations?

She will have additional rights. She will have additional privileges. She will have additional protection. A: She will have no additional rights, privileges, or protection.

In which of the following situations would uninsured motorist coverage NOT protect the owner of an insured vehicle following an accident?

The other driver has liability insurance on his auto, but with limits that are less than the amounts required by state law. The other driver was denied auto insurance coverage. The other driver's insurance company is insolvent. A: The other driver left the scene of a hit-and-run accident but was later identified.

Jenny's business auto policy (BAP) will cover accidents and losses that occur while she is driving her auto in all of the following locations EXCEPT:

U.S. Virgin Islands A: Mexico City, Mexico San Juan, Puerto Rico Montreal, Canada

Bill and Ben are employees of Norton's Appliances. Bill usually drives the company van on deliveries and Ben helps Bill unload and deliver the appliance. While they are taking a refrigerator to a customer, they collide with a large truck. Ben is injured and files a claim against Bill and Norton's Appliances. Is Ben's claim covered under Norton's business auto policy?

Yes, there is no exclusion that would eliminate coverage. No, the handling of property exclusion would apply. No, the mobile equipment exclusion would apply. A: No, the fellow employee exclusion would apply.

With the personal auto policy (PAP), which of the following does the towing and labor costs endorsement (PP 03 03) cover?

labor charges for repairs made after a tow the cost of repair work performed at a garage to which the car is towed A: towing and labor charges incurred where a covered auto is disabled towing and labor charges as well as repairs following the tow

Randy has a personal auto policy with limits of 25/50/10 for uninsured motorists and limits of $5,000 per person for medical payments coverage. When Randy drives through a red light and strikes a tree, what coverages on his PAP will pay for his bodily injury?

uninsured motorists A: medical payments uninsured motorists and medical payments no coverage applies

The business auto policy's liability coverage provides all the following supplemental payments, which do NOT count toward the limit of insurance, EXCEPT:

up to $2,000 for the cost of required bail bonds reasonable expenses incurred at the insurer's request, including actual loss of earnings up to $250 per day because of time off from work interest accruing after entry of judgment in a suit the insurer defends A: the injured party's court costs associated with the claim

Coverage under the Extended Non-Owned Coverage endorsement is most often used for a:

vehicle owned by a family member A: company car temporary substitute vehicle for an owned vehicle rental car

The personal auto policy (PAP) defines many terms used in the policy, such as "your covered auto." Which of the following autos is NOT included in the meaning of that term?

vehicles shown in the declarations newly acquired autos A: borrowed autos temporary substitute autos