Insurance Chapter 6 Quiz

If a bird hits a windshield and breaks it, which Personal Auto policy coverage would pay the loss? A Other than collision coverage B Supplementary payments C Collision coverage D Uninsured motorists coverage

A. Coverage for damage caused by contact with a bird or animal is included under other than collision coverage under Part D - Coverage for Damage to Your Auto.

Which of the following vehicles is not considered an uninsured vehicle? A A vehicle owned by the government B A vehicle that disappears after it hits and runs C A vehicle whose coverage is denied by its insurer D A vehicle insured for less than the state's minimum required coverage

A. Government vehicles are not included in the definition of an uninsured vehicle.

If an insured has comprehensive physical damage coverage provided by their Personal Auto policy, the insurer would deny which of the following physical damage claims? A Loss to the covered auto's tires caused by road damage B Loss to the covered auto's electronic ignition equipment C Loss to sound reproduction equipment permanently installed in the covered auto D Earthquake damage to the covered auto

A. Maintenance issues like wear and tear and road damage to tires are not covered by Part D - Coverage for Damage to Your Auto. Electrical equipment, such as sound reproduction equipment, is only covered if it is permanently installed in the auto. Earthquake is a covered peril under OTC coverage.

A Personal Auto policy is designed to cover: A An individual's or their family's personal use of an auto B Personal and commercial autos that are owned by an individual or family C Only an individual and their spouse's liability for the personal use of an automobile D Only physical damage to an auto personally used by an individual or their family members

A. The Personal Auto policy is a package policy designed for insuring individuals and families. A private passenger automobile used for certain incidental business purposes is eligible, but commercial automobiles are not eligible.

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

A. 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.

Liability coverage under a Personal Auto policy will cover which of the following vehicles? A A non-owned golf cart B An ATV C A cargo van used to deliver packages D A company car furnished to the named insured

A. Vehicles designed mainly for use off public roads are excluded, except for non-owned golf carts. A cargo van would qualify as a commercial vehicle and need Commercial Auto insurance.

If J has no endorsements added to their Personal Auto policy, under which of the following scenarios will J's injuries be covered under Part B - Medical Payments Coverage? A J slid into a tree while driving their company car on a personal errand B J was driving their own car from the post office after retrieving her employer's mail C J was using their car as a taxi when the vehicle rolled over D J broke their leg during an accident that occurred during a timed speed contest

B. Business use of private passenger autos is not excluded under medical payments coverage. Though there is an exclusion for bodily injury sustained while occupying vehicles used in an insured's business, this is intended to eliminate coverage for the insured's commercial autos that would need Commercial Auto insurance coverage. However, Part B does exclude bodily injuries sustained in vehicles used as a public or livery conveyance, vehicles used in an organized racing or speed contest, or vehicles furnished to the named insured (like a company car).

If a bird hits a windshield and breaks it, which Personal Auto policy coverage would pay the loss? A Supplementary payments B Other than collision coverage C Uninsured motorists coverage D Collision coverage

B. Coverage for damage caused by contact with a bird or animal is included under other than collision coverage under Part D - Coverage for Damage to Your Auto.

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

B. Motorcycles are usually excluded by Personal Auto policies, under the exclusion for vehicles with fewer than 4 wheels. Insurers may allow the use of a Miscellaneous Type Vehicle Endorsement to provide PAP coverage for motorcycles, but it is more common for motorcycles to need separate insurance.

Generally, which of the following vehicles is not eligible for coverage under a standard Personal Auto policy? A SUV for an individual's personal use B Pickup with gross vehicle weight of 12,000 lbs. C Automobile used to transport farming materials D 5,000-pound van with custom furnishings

B. Passenger vans and pickups often have to meet a certain weight requirement in order to be eligible for a Personal Auto policy, usually 10,000 pounds or less. This helps distinguish them from autos intended for commercial uses. However, private passenger autos used for incidental business purposes, such as delivering or transporting goods and materials for farming or ranching purposes, are still eligible for PAP coverage.

When resulting from an accident with an at-fault uninsured motorist, damages owed to the insured for all of the following would be paid by the insured's uninsured motorist coverage on their standard Personal Auto policy, except: A Sickness B Property damage C Death D Bodily harm

B. Standard Personal Auto policies do not include coverage for damage to the insured's property that results from an at-fault uninsured motorist. Coverage is only provided for bodily injury, which includes bodily harm, sickness or disease, or death.

Supplementary payments provided by a Personal Auto policy's liability coverage include payments for all of the following, except: A Appeal bond premiums B The insured's loss of income due to bodily injury after an accident, up to $200 per day C The insured's loss of earnings due to trial attendance, up to $200 per day D Bail bonds, up to $250

B. Supplementary payments are expenses incurred in connection with the defense provided by the insurer for covered legal claims brought against the insured. These include the cost of bail bonds (up to $250), premiums on appeal bonds, interest accrued after a judgment is rendered, the insured's loss of earnings due to attendance of trials or hearings (up to $200 per day), and other reasonable expenses incurred at the insurer's request.

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

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.

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. The endorsement amends the definition of covered vehicle to include motorcycles.

Under the Personal Auto Policy, when the insured and the insurer do not agree on the insured's legal right to recovery of damages or the amount recoverable by the insured, what system is used to resolve the disagreement? A Subrogation B Arbitration C Financial Responsibility D Compromise

B. The policy allows arbitration of a disagreement between the insurer and the insured as to whether that insured is legally entitled to recover damages, or as to the amount of damages recoverable.

Which of the following is covered under a Personal Auto Policy? A Intentional damage done by the insured B A vehicle driven with permission by an unlicensed driver C Liability for damage caused by a vehicle designed mainly for off road use D Use of a non-owned vehicle used without permission

B. The policy defines insured as used in Part A, as the named insured or another person using the covered auto with permission, even if not licensed.

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

B. 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.

Insureds under Part C - Uninsured Motorists Coverage of a Personal Auto policy include: A A family member occupying an uninsured auto owned by the named insured B A family member, occupying an insured auto struck by an uninsured vehicle C The operator of an uninsured motor vehicle who is at-fault in an accident with the insured D The owner of an uninsured motor vehicle involved in an accident with the insured

B. Uninsured motorists coverage provides liability coverage in the event the insured is involved in an accident with an at-fault uninsured motorist. The named and insured and family members in their household are considered insureds, as is any passenger occupying the insured's covered auto. Coverage is not provided to the owner or operator of the uninsured motor vehicle. Coverage is not provided if the accident occurs while an insured is occupying an auto that is owned by the insured but not covered by the policy.

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 Homeowners policy B The neighbor's Personal Auto policy C The insured's Personal Auto policy D There is no coverage for this loss

C. Auto coverage follows the vehicle. The neighbor would be considered an insured under the insured's Personal Auto policy, so coverage would be provided by the insured auto owner's coverage first. The neighbor would be driving a non-owned auto, and their Personal Auto policy would state that it provides excess coverage for liability from using a non-owned auto.

N has a Personal Auto policy with 30/60/15 limits. After an accident where N was at fault, $45,000 in damages is awarded against N for bodily injury to the other driver and $10,000 in damages is awarded against N for property damage to the other driver's car. N also incurred defense costs equal to $30,000. How much will N's insurer pay? A $75,000 B $85,000 C $70,000 D $60,000

C. In total, the insurer will pay $70,000. The per person bodily injury limit caps the insurer's coverage for bodily injury damages at $30,000. The $10,000 in damages for property damage is under the per accident property damage limit, so those damages are covered in full. Defense costs are paid in addition to the limit of liability, so those expenses are paid without regard to policy limits. $30,000 + $10,000 + $30,000 = $70,000.

Liability coverage provided by a Personal Auto policy covers damages awarded against an insured for: A Only bodily injury to others B Bodily injury or personal injury to others C Bodily injury or property damage to others D Only damage to the property of others

C. Part A - Liability Coverage covers damages awarded against the insured for the insured's legal liability for bodily injury or property damage. Defense costs are also covered by the insurer.

Which statement is correct about medical payments provided by a Personal Auto policy? A Medical payments coverage is provided by Part A B Medical expenses include payments for injuries that result from an auto racing activity C Expenses for medical services sustained by the insured are covered D Medical expenses are paid only when the insured is legally liable

C. Part B - Medical Payments Coverage pays reasonable medical expenses caused by an accident and incurred by an insured. 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. Like medical payments coverage provided by other policies, payments are paid without regard to fault.

Under Part A of a Personal Auto policy, which of the following is correct about supplementary payments? A They are paid as supplementary benefits only after the policy's liability limit is exhausted B They are paid for expenses related to a defense of a suit brought against the insured for an excluded loss C They are paid in addition to the policy's liability limits D Any payments made for expenses associated with a defense will reduce the policy's liability limits

C. Supplementary payments are payments for expenses associated with the defense for a claim or suit made against the insured, as provided by the insurer. All defense costs, including supplementary payments, are paid in addition to the limits of liability. The insurer's duty to defend ends when the Part A limit is exhausted by the payment of damages for which the insured is legally liable. The insured will not provide a defense if the claim made against the insured is for a loss that is excluded by Part A.

Which of the following vehicles would be excluded under the Personal Auto Policy? A A station wagon B A pickup C An SUV D A motorcycle

D.

Bodily injury sustained by an insured would be covered under Part B - Medical Payments Coverage of a Personal Auto policy if the insured is occupying which vehicle? A The named insured's company car B A 3-wheel vehicle C A vehicle used as a residence D A vehicle used for car pools

D. A vehicle used for a share-the-expense car pool is not considered a public or livery conveyance, and it would be covered.

Under Part D - Coverage for Damage to Your Auto of the Personal Auto policy, vehicle upset would be covered under: A Comprehensive coverage B Other than collision coverage C Transportation expenses coverage D Collision coverage

D. As defined in the policy, collision means the upset of the covered auto or non-owned auto, or their impact with another vehicle or object. OTC coverage, also called comprehensive coverage, offers open perils coverage, but excludes collision losses.

Insureds who have collision and comprehensive coverage for a covered auto under Part D of their Personal Auto policy are subject to: A A deductible applicable only to losses covered by comprehensive coverage B A single deductible applicable to any loss under Part D C A deductible applicable only to collision losses D One deductible for collision losses and a separate deductible for comprehensive losses

D. Collision and comprehensive coverage both require a deductible, and the deductibles will be indicated separately.

An insured has auto insurance with both Company A and Company B. How much will Company B have to pay for a covered liability loss of $3,000 if Company A's limit of liability is $50,000 and Company B's is $100,000? A $1,000 B $3,000 C $1,500 D $2,000

D. 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 provided by both policies ($100,000 of the total $150,000 of insurance). 2/3 of the $3,000 loss = $2,000.

Under a Personal Auto policy, which is covered under Part D - Coverage for Damage to Your Auto? A Road damage to tires B Radar and laser detection devices C Custom painting on a van D A newly acquired vehicle reported to the insurer 10 days after purchase

D. Newly acquired autos may be covered by Part D from the date of ownership as long as certain notice requirements are met. As long as the insured is requesting Part D coverage that already applies to an auto on the policy, the insured may report the auto to the insurer within 14 days of ownership for coverage to be provided. If the insured is requesting Part D coverage that does not already apply to an auto on the policy, the insured has 4 days to report the new auto to have coverage apply. Even if the insured misses the relevant notice requirement, Part D coverage can still apply to the new auto as of the day the insured requests coverage. Damage resulting from normal wear and tear, such as road damage to tires, is not covered by Part D.

When a Personal Auto policy includes Other Than Collision coverage, physical damage coverage will cover all of the following losses, except: A Theft of the auto's catalytic converter B Theft of a stereo permanently installed by the auto's manufacturer C Theft of the auto's battery D Theft of the insured's cell phone from the auto

D. Portable electronics, like a cell phone, are excluded from coverage under Part D of a PAP because those items are protected by other property insurance, such as a Homeowners policy. Electrical equipment that is permanently installed will be covered by Part D.