Chapter 6 Personal Auto Policy (PAP)

Company A's per person Limit of Liability is $100,000 and Company B's is $200,000 for the same insured. How much will Company B have to pay for a covered $6,000 loss caused by the insured?

A $2,000 B Zero C $4,000 D $6,000 C - 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 $6,000 = $4,000.

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 Nothing C $400 D $150 C - Collision with a bird or animal is covered by Other Than Collision coverage. The $50 deductible would apply.

Each of the following is a Part A - Liability Coverage Supplementary payment, except:

A $250 for the cost of a bail bond B Payment for all defense costs C Premiums on appeal bonds D $200 a day for loss of earnings due to an insurer request to assist in the trial B - Payment for all defense costs is part of the Part A - Liability Coverage Insuring Agreement, which also includes payment for bodily injury or property damage for which the insured is legally responsible.

Choose the physical damage claim that would be covered under the Personal Auto Policy.

A Malicious mischief to the tires B Loss due to radioactive contamination C Loss due to war D Mechanical breakdown A - Malicious mischief is covered under Other Than Collision. The other items are excluded.

Liability coverage under the PAP will cover which of the following?

A Non-owned golf cart B Motorcycle C A van used to deliver newspapers D Company car A - Vehicles designed mainly for use off public roads are excluded, except for non-owned golf carts.

The limit of liability is the most paid by the insurer regardless of all of the following, except:

A Premiums shown B Number of insureds C Number of vehicles involved D Amount of surcharges to be applied to policy D - The amount of surcharge to be applied to the policy is not linked to the limit of liability.

All of the following are excluded under Part A of the Personal Auto Policy, except:

A Use of a non-owned vehicle without permission B Intentional damage caused by the insured C Damage caused by a vehicle designed mainly for off road use D A vehicle driven by an unlicensed driver D - If a covered driver is using the covered auto with permission, the driver is still covered even if not properly licensed.

All of the following are true of automobile liability coverage, except:

All of the following are true of automobile liability coverage, except: A It provides third party protection B It pays up to $500/day for loss of income by the insured C It protects the insured for losses when the insured is legally liable D It may be written with either split or single limits Good Job! Supplementary payments include compensation for loss of income up to $200/day.

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

Which of the following will be paid by Supplementary Payments under Part A of the Personal Auto Policy?

A $1,000 for loss of earnings when the insured is disabled B A judgment against the insured up to 10% above liability limits C A $250 bail bond D Medical expenses when the insured's daughter is injured in an auto accident C - Of these choices, only bail bonds is a Supplementary Payment. The policy limit is $250.

A leased auto is an eligible vehicle if the lease contract is for a continuous period of at least how many months?

A 6 B 9 C 12 D 3 A - A leased vehicle under a contract for a continuous period of at least 6 months by the insured is an eligible vehicle.

Which of the following is covered under Part C - Uninsured Motorist Coverage?

A A family member is struck by an insured vehicle B Accident was caused by a hit-and-run driver C The insured is also covered by Workers' Compensation D Punitive damages awarded for the insured B - A hit-and-run vehicle can't be identified and is therefore considered uninsured.

Which of the following is not a duty of the insured if the insured's vehicle is damaged when it hit a tree?

A Call the police B Promptly notify the insurance company C Submit to a physical exam D Submit a proof of loss A - Calling the police is only a duty when seeking uninsured motorist coverage.

The Legal Action Against Us under Part F - General Provisions of the Personal Auto Policy, states which of the following?

A Legal action brought against the insurer must be brought within 180 days of the loss B Legal action brought against the insurer must be brought within 90 days of the loss C Legal action may not be brought against the insurer until the insured has complied with all the terms of the policy D Legal action against the insurer is permitted only when arbitration is unsuccessful D - The insured first must comply with all the terms of the policy before any legal action may be taken against the insurer.

A bird hits and breaks a windshield of an insured vehicle. This is covered under which of the following coverages of the PAP?

A Liability B Collision C Supplementary payments D Other than collision D - Coverage for collision with a bird or animal is provided under Other Than Collision coverage.

Comprehensive covers all of the following losses, except:

A Theft B Contact with a deer C Falling objects D Rollover D - Rollover and hitting another vehicle or object are covered by collision coverage.

Choose the false statement about a newly acquired additional vehicle under the PAP:

Choose the false statement about a newly acquired additional vehicle under the PAP: A It must be reported to the insurer within a specified period B Coverage will be as broad as the broadest coverage on any insured vehicle in the household C It may be used on a farm D It may be used to transport goods for hire if receipts are less than $10,000 D - Vehicles used to carry goods for hire cannot be insured under a Personal Auto Policy.

Policyholder J's PAP includes Other Than Collision coverage, but no Collision coverage, with a $200 deductible. After her parked car rolls downhill and hits a tree incurring $500 in damage to the car, $150 of which is from glass breakage, how much will her insurance company pay?

A $350 B Zero C $500 D $150 B - Without collision coverage, the accident is not covered under the policy. Glass breakage can be covered by Collision or Other Than Collision at the insured's option, but in this case, the loss is less than the deductible, and would not be claimed.

Under a policy with limits of 25/50/10, what would be the insurer's liability arising out of a single accident where claimant A has injuries in the amount of $25,000; claimant B, $20,500; and claimant C $4,000?

A $85,000 B $50,000 C $49,500 D $25,000 C - The policy would pay up to the BI limit of $25,000 for A; $20,500 for B; and $4,000 for C. $25,000 + $20,500 + $4,000 = $49,500.

A private passenger auto includes a leased vehicle as long as the lease contract is continuous for how many months duration?

A 12 B 3 C 9 D 6 D - A lease for less than 6 months is not considered a private passenger auto eligible for coverage under the Personal Auto Policy.

Under Part D, Within how many days must an insured report the purchase of a new vehicle that is replacing an existing vehicle covered by collision coverage?

A 14 B 15 C 4 D 5 A - If a vehicle covered by Part D coverages is replaced by a new car with the same coverage, the policy will automatically extend coverage for 14 days.

If an insurer non-renews an insured's policy for underwriting reasons, what is the minimum number of days' notice to the insured?

A 20 B 60 C 30 D 45 A - At least 20 days' notice is required.

Transportation Expenses Coverage under Part D of the Personal Auto Policy begins how long after the covered auto has been stolen?

A 24 hours B 48 hours C 72 hours D Immediately B - Transportation Expenses Coverage pays $20 per day, up to $600, for transportation expenses incurred due to loss of the covered auto. Coverage begins 48 hours after a theft.

Under the PAP, how long does an injured party have following an accident to report a Medical Payments claim?

A 6 months B 1 year C 3 years D 48 hours C - The insurer will pay reasonable expenses incurred for necessary medical or funeral services incurred within 3 years of the date of the accident.

A Medical Payments claim will be paid by the insurer within how many months from the date of the occurrence?

A 60 B 24 C 18 D 36 D - A Medical Payments claim will be paid within 3 years for reasonable expenses for medical and funeral expenses regardless of fault.

Which vehicle would not be covered under a Personal Auto Policy with no added endorsements?

A A motorcycle B An owned trailer C A pickup truck with a gross vehicle weight of 7,600 pounds D An eight passenger van with a gross vehicle weight of 8,600 pounds A - Vehicles that have fewer than four wheels are excluded from coverage, but may be added to the policy under a Miscellaneous Type Vehicle endorsement.

Under the Personal Auto Policy, a family member is defined as which of the following?

A A person related to the named insured who has frequent use of the insured automobile B A person using the insured automobile with the named insured's permission C A member of the named insured's immediate family, regardless of place of residence D A person who is a resident of a household and related by blood, marriage or adoption D - To qualify as a family member, a person must reside in the insured's household.

Which of the following would not be covered under a Personal Auto Policy?

A A pickup truck with a gross vehicle weight of 7,600 pounds B A motorcycle C An eight passenger van with a gross vehicle weight of 7,600 pounds D Any trailer that the insured owns Good Job! Generally, vehicles that have fewer than 4 wheels are excluded from coverage.

Which of the following is not eligible for a Personal Auto Policy?

A A trailer being used as a farm wagon B A private passenger auto used as a taxicab C A 9-passenger station wagon D A van that is used to haul gardening supplies for personal use B - A vehicle used to transport people or goods for hire is not eligible for a Personal Auto Policy. (An exception applies to vehicles used for farming/ranching purposes.)

An uninsured motor vehicle is any of the following, except:

A A vehicle insured by an insolvent insurance company B A vehicle with liability limits less than the state requirement C A vehicle that does not have insurance D A company car D - Besides a company car, a vehicle owned by the insured or a family member, or a vehicle furnished or available for the regular use of the named insured or a family member, is not considered an uninsured vehicle.

The Miscellaneous Type Vehicle Endorsement attached to a Personal Auto Policy allows eligibility of a motorcycle by:

A Amending the definition of 'your covered auto' and 'newly acquired auto' to include any miscellaneous type vehicle B Altering the four-wheel requirement C Adding motorcycles to the list of eligible vehicles D Specifically naming it in the Declarations A - The endorsement amends the definition of covered vehicle to include motorcycles.

The Extended Non-Owned Coverage endorsement to the Personal Auto Policy should be added by an insured who is:

A Being furnished a company car B Towing a rented snowmobile C Travelling to Mexico and will be renting a car there D Renting a motorcycle A - The endorsement covers non-owned autos furnished or available for the insured's regular use.

All of the following are true of automobile physical damage Coverage D, except:

A Collision coverage usually is written with a deductible B It covers damage to the insured auto and to another auto with which it collided C Damage to the insured auto that is caused by colliding with a deer would be covered under Other Than Collision coverage D It covers damage to the insured auto regardless of liability B - Automobile physical damage does not cover any damage to a vehicle hit by the insured. This liability would be covered by Part A.

Which of the following is false under the Personal Auto Policy?

A Coverage is provided for theft under property damage liability B Coverage for damage to an insured vehicle is provided without regard to liability C No-fault coverage is provided in states that require it D Medical payments may be provided for up to 3 years following an accident A - Theft is covered under Physical Damage (Part D), not property damage liability (Part A).

What is the purpose of the Extended Non-Owned Coverage for a Named Individual endorsement?

A Covers non-owned vehicles furnished for the insured's regular use B Coverage is extended 25 miles into Mexico C Covers an individual who does not own a car D Extends coverage for a leased vehicle A - This endorsement provides excess coverage over the primary coverage insuring the non-owned vehicle.

Which of the following is covered under Part D of the Personal Auto Policy?

A Damage to a radar detector B Damage to a van used as a livery C Water or flood damage to a convertible when the top is left down D Theft loss to a portable CD player C - Water or flood damage is covered under Other Than Collision coverage. Damage to audio electronics and radar detection equipment is excluded.

Which of the following claims would be covered by Collision Coverage under Part D of the Personal Auto Policy?

A Damage to the auto caused by objects blown into it during a severe windstorm or tornado B Breakage of the windshield caused by collision with a stone or other missile C Damage to the auto caused by collision with an animal on the roadway D Damage to the insured auto's bumper when the auto crashed into a tree D - Part D of the policy specifically stipulates certain causes of loss that are not considered collision. They include missiles or falling objects, fire, theft, explosion, windstorm, contact with a bird or animal, among others.

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 Material misrepresentation C Claims history D Non-payment of premium C - Claims history is often a reason for non-renewal of an automobile policy, but not for a mid-term cancellation.

Which of the following is a duty required of the insured in the event of a loss under the PAP?

A Immediately initiate repairs to the vehicle to protect it from further damage B Give notice of the accident to the insurer within 5 days C Allow an inspection and appraisal of the damage before an auto is repaired D If the vehicle was stolen, contact the insurer for permission to report the theft to the police C - Under Part E - Duties After a Coverage D Loss, the insured must also allow and inspection an appraisal before the damage is repaired and promptly notify the police if the car was stolen.

Which of the following uses of a vehicle is not excluded under the Medical Payments coverage?

A Insured uses a truck for incidental purposes B A neighbor uses the insured's car without permission C An insured drives a company car D An insured rides a motorcycle A - Bodily injury sustained by an insured isn't covered if the insured is using a vehicle while engaged in business. However, a coverage giveback applies to private passenger autos, pickups, vans, and owned trailers used with such vehicles. This exclusion applies to the business use of trucks and other commercial vehicles.

Which of the following vehicle uses is not excluded under Personal Auto Medical Payments?A

A Livery B Farm use C Occupying a vehicle as a residence D Racing B - Farm use is not listed as an exclusion as all other choices are.

Which of the following is not true about medical payments under the Personal Auto Policy?

A Medical expenses of the insured and family members are covered B The coverage limit applies per person, per accident C Medical expenses of all persons occupying the insured auto are covered D Coverage applies only for medical expenses incurred within one year of the accident D - Medical Payments coverage includes medical expenses incurred within 3 years from the accident.

Physical damage to the insured auto that is not covered under collision, and is not otherwise excluded, would be covered under:

A Named perils B Comprehensive C Property Damage Liability D Transportation Expenses B - The Other than Collision coverage, also known as Comprehensive, provides coverage for damages not caused by collision and not excluded in the exclusions.

The Personal Auto Policy applies:

A Only in the U.S. and its territories B Only in the U.S., its territories, Canada, Puerto Rico, and Mexico C Anywhere in the world D Only in the U.S., its territories, Canada, and Puerto Rico D - Coverage does not extend to Mexico except on an excess basis with restrictions.

While driving in another state with higher coverage requirements, which of the following sections of the PAP automatically provides the required coverage?

A Out of State Coverage B Automatic Extension of Coverage C Any State Coverage D Other Insurance A - Out of State Coverage extends coverage required by the financial responsibility laws of another state to the insured's car automatically.

Part E of the Personal Auto Policy states that after a loss the insured must:

A Protect the auto from further damage B Give notice of the accident to the insurer within 30 days C If the vehicle was stolen, contact the insurer for permission to report the theft to the police D Immediately initiate repairs to the vehicle to protect it from further damage A - In the event of a covered loss, Persons submitting claims to the insurance company are required to: Notify the insurer promptly about how, when, and where the accident or loss occurred; Cooperate with the investigation and settlement of any claim; Promptly send to the insurer any copies of notices or legal papers received; Submit to a physical exam as reasonably required by the insurer; Authorize the insurer to obtain copies of medical reports and other pertinent records; Submit a proof of loss when required by the insurer.

The Named Non-owner endorsement:

A Provides only liability coverage B Covers only the person named on the endorsement C Does not supply coverage to meet a state's financial responsibility law requirements D Does not apply to a rented vehicle B - The Named Non-Owned endorsement provides liability, medical payments, and UM coverage for a person who does not own, but often borrows or rents a car.

Coverage for recreational vehicles can be added to the Personal Auto Policy by the:

A Recreational Vehicles Endorsement B Named Non-Owner Endorsement C Cross Terrain Endorsement D Miscellaneous Type Vehicle Endorsement D - The Miscellaneous Type Vehicles coverage includes recreational vehicles.

After an automobile policy has been in effect for 60 days, the insurer may cancel the policy for any of the following reasons, except:

A Submission of four or more claims during a single policy period B Suspension of the driver's license of the named insured's or household resident C Material misrepresentation of information on the application by the insured D Non-payment of premium Generally, claims history is a valid reason for an insurer to nonrenew a policy, but it is NOT a valid reason to cancel a policy.

A ____________vehicle is a covered vehicle when Your Covered Auto is being repaired due to a covered loss.

A Temporary substitute B Replacement C Substitute D Conditional A - A temporary substitute is also covered if the vehicle is out of normal use due to breakdown, servicing, loss, or destruction. Except for in part D

When an auto has two auto policies with the same insurer, the insurer's liability would not exceed:

A The highest limit of the two policies B The limit of the first one purchased C The combined limit of the two policies D The limit of the last one purchased A - Coverage will not be duplicated, so the policy with the highest limit applies.

The insurer's limit of liability for a vehicle damaged by a loss under Part D is which of the following?

A The lesser of actual cash value and replacement value B The greater of actual cash value and replacement value C Replacement value D Actual cash value A- The insurer's limit of liability for loss is the lesser of the actual cash value (ACV) of the vehicle and the amount necessary to repair or replace the vehicle with another of like kind and quality.

Whose policy will be primary for bodily injury coverage for the injured party if a neighbor borrows an insured's car and injures a pedestrian?

A The neighbor's personal auto policy B There is no coverage for this loss C The neighbor's homeowners liability policy D The insured's auto policy D - Auto coverage follows the vehicle. The insured owner's coverage is primary.