Ch. 6 Personal Auto Policy - Random Questions 1 - MI P&C Licensing

Transportation expenses resulting from a collision or OTC loss will be paid up to what amount under Part D of the PAP? A. $600 B. $500 C. $1,000 D. $200

A. $600 A maximum of $20 per day, up to $600, will be paid for transportation expenses. 6.5

Under medical payments coverage, how long after an accident does the insured have coverage for resulting medical expenses? A. 3 years B. 4 years C. 1 year D. 5 years

A. 3 years Expenses must be incurred within 3 years of the accident. 6.3

The Personal Auto Policy applies: A. Only in the U.S., its territories, Canada, and Puerto Rico B. Only in the U.S. and its territories C. Only in the U.S., its territories, Canada, Puerto Rico, and Mexico D. Anywhere in the world

A. Only in the U.S., its territories, Canada, and Puerto Rico Coverage does not extend to Mexico except on an excess basis with restrictions. 6.7

Transportation expenses resulting from a collision or OTC loss will be paid up to what amount under Part D of the PAP? A. $1,000 B. $600 C. $200 D. $500

B. $600 A maximum of $20 per day, up to $600, will be paid for transportation expenses. 6.5

The Personal Auto Policy may be used to insure all of the following, except: A. A station wagon B. A conversion van C. A motorcycle D. A farm pickup

C. A motorcycle Motorcycles may not be covered under the PAP. 6.2

The Named Non-owner endorsement: A. Covers only the person named on the endorsement B. Does not apply to rented vehicles C. Provides only Liability coverage D. Does not meet the state's financial responsibility law requirements

A. Covers only the person named on the endorsement This endorsement is for a person who does not own a car, but often borrows or rents a car and wants to assure personal coverage for liability, medical payments, and UM. 6.8

All of the following are true about a newly acquired additional vehicle, except: A. It can be used to transport goods for hire if receipts are less than $10,000 B. It must be reported to the insurer within 14 days of purchase C. It may be used on a farm D. Coverage is as broad as the broadest coverage on any vehicle under the policy

A. It can be used to transport goods for hire if receipts are less than $10,000 Vehicles used to carry goods for hire cannot be insured under a Personal Auto Policy. 6.1

Coverage for recreational vehicles can be added to the Personal Auto Policy by the: A. Miscellaneous Type Vehicle Endorsement B. Named Non-Owner Endorsement C. Recreational Vehicles Endorsement D. Cross Terrain Endorsement

A. Miscellaneous Type Vehicle Endorsement The Miscellaneous Type Vehicles coverage includes recreational vehicles. 6.8

A temporary substitute vehicle is not a covered auto if used to substitute for which of the following? A. Rental car B. Recently purchased van C. Owned trailer D. An owned car

A. Rental car To be eligible for coverage, a temporary substitute vehicle may only be used in place of a vehicle described in the policy. 6.1

Which of the following persons cannot collect a claim payment under Uninsured Motorist coverage? A. The owner of a parked car struck by a falling object B. The owner of a car struck by an uninsured motorist C. A pedestrian struck by a hit-and-run vehicle D. The owner of a car that was struck by a vehicle whose auto carrier was insolvent at the time of the accident

A. The owner of a parked car struck by a falling object UIM insurance provides coverage for bodily injury only. Property damage would be covered by Part D of the owner's policy, or by Uninsured Motorist Property Damage, which is optionally available. 6.4

Automobile collision insurance under the Personal Auto Policy provides payment for losses: A. To your car, regardless of liability B. To the car you run into, regardless of liability C. To your car and the car you run into D. To your car only if you are legally liable

A. To your car, regardless of liability Collision only applies to a vehicle of the insured and is applied regardless of fault. 6.1

Supplementary payments under Part A of the Personal Auto Policy will pay which of the following? A. Doctor bills when the insured is injured in an auto accident B. $250 for bail bonds C. A judgment against the insured in excess of liability limits D. Loss of earnings when the insured is disabled

B. $250 for bail bonds Supplementary payments include bail bonds payments up to $250. 6.2

Policyholder J hit a deer with his Honda. J has collision coverage with a $250 deductible and Other Than Collision coverage with a $50 deductible. The damage to J's car was $450. How much will the policy pay? A. $200 B. $400 C. $150 D. Nothing

B. $400 Collision with a bird or animal is covered by Other Than Collision coverage. The $50 deductible would apply. 6.5

Of the following, which is covered under Part D - Coverage for Damage to Your Auto? A. Road damage to tires B. A newly acquired vehicle added to the policy within 14 days C. Radar and laser detection devices D. Custom painting on a van

B. A newly acquired vehicle added to the policy within 14 days As long as a new car is added to the policy within 14 days, comprehensive and collision will be covered. 6.5

The definition of an uninsured motorist vehicle under the Personal Auto Policy includes all of the following, except: A. A vehicle for which there is no liability policy B. A vehicle newly acquired by the named insured that has not been reported to the insurer C. A vehicle insured by an insolvent company D. A hit and run vehicle that cannot be identified

B. A vehicle newly acquired by the named insured that has not been reported to the insurer A vehicle owned by the insured would not fit the definition of an uninsured vehicle. 6.4

The Miscellaneous Type Vehicle Endorsement attached to a Personal Auto Policy allows eligibility of a motorcycle by: A. Altering the four-wheel requirement B. Amending the definition of 'your covered auto' and 'newly acquired auto' to include any miscellaneous type vehicle C. Specifically naming it in the Declarations D. Adding motorcycles to the list of eligible vehicles

B. Amending the definition of 'your covered auto' and 'newly acquired auto' to include any miscellaneous type vehicle The endorsement amends the definition of covered vehicle to include motorcycles. 6.8

Which of the following is not a valid reason to cancel a personal auto policy after the first 60 days of coverage? A. Driver's license suspension B. Claims history C. Non-payment of premium D. Material misrepresentation

B. Claims history Claims history is often a reason for non-renewal of an automobile policy, but not for a mid-term cancellation. 6.7

Which statement is true of medical payments in a Personal Auto Policy? A. Medical payments are provided by Part A B. Expenses for medical services sustained by the insured are covered C. Medical expenses include insured's injuries that result from racing activity D. Medical expenses are paid only when the insured is legally liable

B. Expenses for medical services sustained by the insured are covered Coverage applies to any occupant of the insured vehicle and also to members of the insured's household as pedestrians when struck by a motor vehicle or as an occupant of another person's vehicle. 6.3

All of the following are true about a newly acquired additional vehicle, except: A. It must be reported to the insurer within 14 days of purchase B. It can be used to transport goods for hire if receipts are less than $10,000 C. It may be used on a farm D. Coverage is as broad as the broadest coverage on any vehicle under the policy

B. It can be used to transport goods for hire if receipts are less than $10,000 Vehicles used to carry goods for hire cannot be insured under a Personal Auto Policy. 6.1

Which of the following is covered under Part D of the Personal Auto Policy? A. Damage to a van used as a livery B. Water or flood damage to a convertible when the top is left down C. Damage to a radar detector D. Theft loss to a portable CD player

B. Water or flood damage to a convertible when the top is left down Water or flood damage is covered under Other Than Collision coverage. Damage to audio electronics and radar detection equipment is excluded. 6.5

An insured has auto insurance with both Company A and Company B; how much will Company B have to pay for a covered loss of $3,000 if Company A's Limit of Liability is $100,000 and Company B's is $200,000? A. $500 B. $3,000 C. $2,000 D. $1,000

C. $2,000 If other auto liability insurance applies, each policy will pay its proportionate share of the loss. Company B's limit is 2/3 of the total coverage by both policies. 2/3 of the total loss of $3,000 = $2,000. 6.2

The Limited Mexico coverage provides coverage for how many miles into Mexico? A. 10 miles B. 100 miles C. 25 miles D. 50 miles

C. 25 miles The limit is 25 miles and the endorsement also applies only if the insured's visit to Mexico is for 10 days or less. 6.8 ****THIS IS AN ENDORSEMENT AND THE ANSWER WILL BE NO MEXICO ON THE EXAM****

All of the following are considered uninsured motor vehicles, except: A. A vehicle to which the insuring company becomes insolvent B. A vehicle to which no liability policy applies C. A vehicle that is being used as a residence D. A hit and run vehicle

C. A vehicle that is being used as a residence Vehicles used as a residence are excluded form the definition of an uninsured vehicle. 6.4

Which of these statements is not true about Uninsured Motorist coverage? A. A hit-and-run driver is considered uninsured B. A driver is considered uninsured when his/her insurer denies a claim C. Coverage is automatically provided for the damage to the insured vehicle D. Bodily injury must be caused by another person who is legally responsible

C. Coverage is automatically provided for the damage to the insured vehicle UIM insurance provides coverage for bodily injury only. Property damage would be covered by Part D of the owner's policy, or by Uninsured Motorist Property Damage, which is optionally available. 6.4

Which of the following is not true about a claim payment for a Part D under Personal Auto? A. The insurance company can keep or return a stolen car B. The insurance company can decide whether to pay cash or repair the vehicle C. If the insurer returns stolen property to the insured, no payment for damages incurred will be made D. The claim payment will include any applicable sales tax

C. If the insurer returns stolen property to the insured, no payment for damages incurred will be made If the insurance company returns a stolen car to the insured, it must pay for any damage that occurred as a result of the theft. 6.5

Which of the following is not an eligible vehicle for coverage under the Personal Auto Policy? A. SUV B. Van C. Pick-up with gross vehicle weight of 12,000 lbs. D. Automobile

C. Pick-up with gross vehicle weight of 12,000 lbs. Only pick-ups with a gross vehicle weight of 10,000 lbs. or less are eligible. 6.1

Which of the following is an insured's duty in the event of loss under the PAP? A. Call the police if legal papers are received B. Refer the claim adjuster to an attorney C. Promptly notify the police in the event of a hit-and-run accident D. Contact the at-fault party

C. Promptly notify the police in the event of a hit-and-run accident The insured must cooperate with the insurer, promptly notify the insurance company of a loss, and immediately send legal papers to the insurer. 6.6

Which statement is not correct about the Right to Recover Payment under the PAP? A. The insured must reimburse the insurance company if the insured is paid by the other party B. The person who is paid a claim must give the insurance company the right to recover damages C. The Right to Recover is an insured's right D. The right to recover involves going after the negligent party to pay for the insured's loss

C. The Right to Recover is an insured's right The Right to Recover is a right given by the insured to the insurer after the insurer paid a claim. 6.7

When an auto has two auto policies with the same insurer, the insurer's liability would not exceed: A. The combined limit of the two policies B. The limit of the first one purchased C. The highest limit of the two policies D. The limit of the last one purchased

C. The highest limit of the two policies Coverage will not be duplicated, so the policy with the highest limit applies. 6.7

Policyholder B has a business auto policy with limits of 100/300/50. In an accident for which B was liable, there were BI claims in the amounts of $80,000; $100,000; and $125,000; and PD claims of $20,000 and $35,000. How much will his policy pay? A. $305,000 BI and $50,000 PD B. $300,000 BI and $50,000 PD C. $305,000 BI and $55,000 PD D. $280,000 BI and $50,000 PD

D. $280,000 BI and $50,000 PD The BI claims of $80,000 and $100,000 will be paid in full. The $125,000 claim exceeds the per person limit and will only be paid up to $100,000, resulting in total BI payments of $280,000. The PD payments will be capped at the policy limit of $50,000 per accident. 6.2

A leased auto is an eligible vehicle if the lease contract is for a continuous period of at least how many months? A. 12 B. 9 C. 3 D. 6

D. 6 A leased vehicle under a contract for a continuous period of at least 6 months by the insured is an eligible vehicle. 6.1

Which of the following is not eligible for a Personal Auto Policy? A. A van that is used to haul gardening supplies for personal use B. A trailer being used as a farm wagon C. A 9-passenger station wagon D. A private passenger auto used as a taxicab

D. A private passenger auto used as a taxicab A vehicle used as a public or livery conveyance is not eligible for a Personal Auto Policy. 6.2

All of the following are excluded under Part A of the Personal Auto Policy, except: A. Damage caused by a vehicle designed mainly for off road use B. Intentional damage caused by the insured C. Use of a non-owned vehicle without permission D. A vehicle driven by an unlicensed driver

D. A vehicle driven by an unlicensed driver If a covered driver is using the covered auto with permission, the driver is still covered even if not properly licensed. 6.2

Which of the following is covered under Part A of the Personal Auto Policy? A. Damage caused driving a neighbor's car without permission B. Property damage to a company car C. Damage to property owned by the insured D. Injury to an employee while away from work

D. Injury to an employee while away from work Liability is only excluded if the injury to an employee occurs in the course of employment. 6.2

While driving in another state with higher coverage requirements, which of the following sections of the PAP automatically provides the required coverage? A. Other Insurance B. Any State Coverage C. Automatic Extension of Coverage D. Out of State Coverage

D. Out of State Coverage Out of State Coverage extends coverage required by the financial responsibility laws of another state to the insured's car automatically. 6.2

Under a PAP, liability resulting from the insured's use of a non-owned auto is: A. Not covered because of the Care, Custody and Control Clause B. Shared pro rata between the insured's policy and the policy on the vehicle C. Provided on a primary basis D. Provided on an excess basis

D. Provided on an excess basis The owner's coverage is primary and the driver's coverage is excess. 6.2

Which of the following vehicles is covered under Part B - Medical Payments of the personal auto policy? A. 3-wheel vehicle B. Family member's company car C. Vehicle used as a residence D. Share-the-expense vehicle

D. Share-the-expense vehicle A share-the-expense vehicle is not considered a public or livery conveyance, and is therefore not excluded under the policy. 6.3

All of the following are false about Damage to Your Auto, except: A. In the event of total loss, adjustment will be made for the physical condition of the vehicle B. Coverage includes the cost to repair previous damage if required to fix new damage C. The sales tax on a replacement vehicle is not covered D. The Limit of Liability is the greater of the vehicles actual cash value or the cost to repair

TRUE STATEMENT: A. In the event of total loss, adjustment will be made for the physical condition of the vehicle The physical condition of the vehicle is considered in the event of a total loss. 6.5