Personal Auto Insurance (9)

All of the following vehicles can be insured under an unendorsed personal auto policy EXCEPT: A) motorcycles. B) trailers hitched to the insured vehicle. C) rental cars. D) newly acquired vehicles.

motorcycles

How much will the personal auto policy pay for a rental car if the insured vehicle is stolen?

$20 per day, up to $600 maximum. This coverage starts 48 hours after the theft.

Mary was involved in an accident with a hit-and-run driver. The car was damaged. Mary is required to do what?

A) calling the police. B) permitting the insurer to inspect the damaged car. C) protecting the car against further damage.

Bobby, age 16, borrows his parents' car without their permission and gets into an accident. Which of the following statements about coverage under the parents' personal auto policy is CORRECT? A) Bobby is covered by his parents' policy because he is a family member. B) Bobby is covered by his parents' policy because he is included in the definition of named insured. C) Bobby is not covered for this accident because he used the car without permission. D) Bobby is not covered because it was not his car.

A) Bobby is covered by his parents' policy because he is a family member.

Mary was involved in an accident with another driver. The car was damaged. Her insurance company reimburses her for the damage and seeks recovery from the negligent driver. What is this process called?

Subrogation

Physical damage losses under the personal auto policy are reimbursed on what basis?

Actual cash value or cost to repair or replace, whichever is less.

If a dispute arises over whether an insured is entitled to uninsured motorists coverage, what process is used to settle the dispute?

Arbitration

Which one of the following would NOT be paid as supplementary payments under Part A of a personal auto policy? A) The insured's lost earnings up to $200 per day because of court appearances. B) Funeral expenses for the insured. C) Expenses the insurer incurs in investigating claims. D) Interest accruing after a judgment is entered which was defended by the insurer.

B) Funeral expenses for the insured.

While backing her car into a parking space on a neighborhood street, Melanie struck a fire hydrant with her bumper. Which coverage under Melanie's personal auto policy (PAP) will cover the damage to the bumper?

Collision Part D of the PAP covers damage sustained by the insured auto after impact with another vehicle, impact with an object, or upset (rolling the vehicle over).

Tammy was struck by a hit-and-run driver and suffered injuries to her neck. Which part of her personal auto policy, if any, will cover this loss?

Her uninsured motorist coverage pays her medical bills

What type of endorsement would be used to insure a recreational vehicle under the personal auto policy?

Miscellaneous type vehicle endorsement

What part of the personal auto policy covers losses caused by malicious mischief, vandalism, hail, or floods?

Other Than Collision.

Depending on the circumstances, a passenger injured in an automobile accident may be able to recover under all of the following coverages EXCEPT: A) uninsured motorist. B) collision. C) liability. D) medical payments.

collision Collision coverage provides only physical damage coverage for the insured's vehicle. It protects against damage done to the covered auto by impact with another vehicle or an object. It also covers damage sustained if the car rolls over (is upset).

Comprehensive coverage pays for all of the following damages EXCEPT: A) explosion. B) hitting a deer. C) overturning of the auto. D) glass breakage.

overturning of the auto. Comprehensive coverage pays for loss to a covered auto or its equipment for any cause except collision, overturn, or upset.

Howard bought a car yesterday for his youngest son to drive to school and his job. Under Howard's automobile policy, this car is considered a (n):

owned automobile.

The insured rear-ends another vehicle that is stopped at a red light. The driver of the car struck by the insured is badly injured. The insured, his daughter and her friend were in the car and were also injured. Part B of the insured's personal auto policy will pay medical expenses for all of the following EXCEPT: A) the insured's daughter's friend. B) the insured's daughter. C) the insured. D) the occupant of the car struck by the insured.

D) the occupant of the car struck by the insured.

Which one of the following would be considered a temporary substitute vehicle under the terms of the personal auto policy?

Loaner vehicle provided by an auto repair shop.

Jane insures her car with ABC Insurers. Which of the following individuals best describes a family member on Jane's policy?

Maggie, her older sister, who lives with Jane

Jane's sister, Maggie, who lives with Jane and just sold her car, drives Jane's sports car to a party. On the way home Maggie loses control of the car, hits a parked car, and rolls the car over. Maggie is severely injured and taken to the hospital. What coverage will reimburse Maggie for her medical bills?

Medical payments coverage pays reasonable expenses for necessary medical services. Covered persons include the insured and any family member while in the insured vehicle.

Jane's sister, Maggie, who lives with Jane and just sold her car, drives Jane's sports car to a party. On the way home Maggie loses control of the car, hits a parked car, and rolls the car. Maggie dies as a result of her injuries. What coverage will reimburse Jane for Maggie's funeral expenses?

Medical payments pay funeral expenses for covered persons, which includes the insured and any family member while in the insured vehicle.

An auto policy would provide coverage for an auto driven in all of the following places EXCEPT: A) Alberta, Canada. B) Paducah, Kentucky. C) Honolulu, Hawaii. D) Mexico City, Mexico.

Mexico City, Mexico. The personal auto policy applies only to losses, accidents, or occurrences that take place within the United States, its territories and possessions, or Canada, or while being transported between ports in any of those places. Coverage for losses in Mexico usually must be purchased from Mexican insurers. However, some insurers provide coverage for vehicles from the United States operating within a certain distance inside the Mexican border, such as 100 miles. Many states require some limited insurance for physical damage in Mexico.

The Personal Auto Policy (PAP) has territorial limits that include: A) Montreal, Canada and Puerto Rico. B) London, England. C) Mexico City, Mexico. D) Western Europe

Montreal, Canada and Puerto Rico.

Steve meets with his agent to apply for an automobile insurance policy on his 2 personal cars. In reviewing the policy, Steve finds he is not willing to accept the duties listed in the conditions section. He signs the application but adds a note deleting the duties to the insurer. Is this acceptable to the company?

No, a written endorsement by the insurer is the only way to change the policy.

Automobile comprehensive coverage insures all of the following perils EXCEPT A) theft. B) collision. C) glass breakage. D) fire.

collision

The law that provides that each party must accept responsibility for his own losses and must recover losses from his own insurer is the:

no-fault law. No-fault laws attempt to remove as many liability cases from the courts by providing that each party accept responsibility for his own losses and recover any damages for these losses directly from his own insurer. These no-fault laws often restrict the amount of recovery for such losses and may prohibit any recovery from the insurer for certain losses, such as pain and suffering.

Howard borrows his neighbor's car because his son took his car to college for a week while moving into the dorm. Under Howard's automobile policy, his neighbor's car is considered a (n):

nonowned automobile.

Which of the following damages is covered Under Part D-Coverage for Damage to the Insured's Auto? A) Flood. B) Wear and tear. C) Freezing. D) Mechanical breakdown not resulting from total theft.

flood Part D-Coverage for Damage to the Insured's Auto provides other than collision (comprehensive) coverage and collision coverage. Other than collision coverage protects against almost all accidental damage, with the exception of coverage provided under collision, including fire, theft, explosion, earthquake, windstorm, missiles, falling objects, hail, water, flood, vandalism and malicious mischief, riot and civil commotion, glass breakage, and collision with birds or animals, wild or domestic. Damage from wear and tear, freezing and mechanical breakdown, and electrical breakdown (unless resulting from total theft of the auto) are excluded. Road damage to tires is also excluded.

While driving down the street, an insured swerves to avoid a pedestrian, goes over a curb, and damages a neighbor's fence. Which of the following will pay for the repairs to the fence? A) The driver's general liability policy. B) The driver's automobile policy under the collision provisions. C) The driver's automobile policy under the property damage liability provisions. D) The insured's homeowners policy.

C) The driver's automobile policy under the property damage liability provisions. Property damage liability provides coverage for the responsibility of compensating another person for lost use or destruction or damage to that person's tangible property. This coverage is included in most personal and commercial liability policies along with bodily and personal injury coverage's.

In automobile insurance, the term supplementary payments refers to payments:

C) covering reasonable expenses incurred at the insurer's request and other specified expenses that are not subject to the policy limit.

Medical payments coverage is Part B in the personal automobile policy. All of the following statements about medical payments coverage are true EXCEPT: A) amounts paid under this coverage are reduced by amounts paid for medical expenses under bodily injury or uninsured motorist coverages. B) if other auto medical insurance applies when driving a nonowned vehicle, this policy is excess. C) if other auto medical insurance applies when driving an owned vehicle, this policy is excess. D) it does not cover bodily injury while using an insured vehicle as a residence.

C) if other auto medical insurance applies when driving an owned vehicle, this policy is excess.

All of the following vehicles are eligible for coverage under the PAP EXCEPT: A) four-wheel drive SUV. B) minivan with a 7,500 gross vehicle weight. C) pickup with a gross vehicle weight of 15,000 pounds. D) private passenger auto.

C) pickup with a gross vehicle weight of 15,000 pounds.

Personal auto liability insurance provides coverage in all of the following situations EXCEPT when: A) the insured accepts money for using the auto in a car pool. B) the insured's 12-year-old child takes the auto for a joy ride. C) the insured uses the auto as a taxi. D) a relative living in the same household as the insured takes the auto without permission.

C) the insured uses the auto as a taxi.

Roberta shares carpool expenses with co-workers. During her turn driving to work, she is involved in an accident in which one of her passengers is injured and her car is damaged. How does her personal auto policy respond?

D) The insurance company will cover the auto repairs and injuries.

Cecil sells his car and buys another one to replace it. How does the liability coverage in his personal auto policy apply to the replacement vehicle?

It is automatically covered

While driving to work one morning, Jessica is hit from behind by a car driven by Sam. Jessica is injured and taken to the hospital where she is admitted with a broken shoulder and other internal injuries. During the police investigation, it is determined that Sam was 100% negligent and did not have automobile insurance. What coverage will indemnify Jessica for her injuries?

Jessica's uninsured motorist bodily injury coverage

Personal injury protection (PIP) is a form of no-fault auto insurance. All of the following characteristics of PIP are correct EXCEPT: A) pain and suffering are not covered. B) it provides third-party coverage. C) it provides first-party coverage. D) it covers bodily injury from any occurrence without regard to fault.

it provides third-party coverage. PIP is a first-party coverage that protects the insured for bodily injury from any occurrence without regard to fault.

Howard borrows his neighbor's car because his car is in the body shop after his oldest son had an accident on a trip home from college. Under Howard's automobile policy, his neighbor's car is considered a (n):

temporary substitute automobile.

Under an auto policy, Other than Collision coverage would apply to which of the following situations? A) All of the car's tires are stolen. B) An insured has her car parked at an airport, and a suitcase is stolen from the car. C) The car rolls over after hitting a patch of ice. D) An insured breaks a window to gain access because the keys were left inside.

All of the car's tires are stolen

Mr. Jones has an auto policy with Coverage A limits of 15/30/10. He also has a $250 deductible for collisions. He runs a red light at an intersection and collides with Mrs. James' car. Mrs. James is awarded $30,000 for her injuries and $6,000 for the damage to her car. Mr. Jones' car sustains $750 in damage. How much will Mr. Jones' policy pay for this incident?

$21,500.00 The amount of coverage for Mrs. James' injuries is limited to $15,000. The damage to her car, $6,000, is covered in full because it is within the $10,000 property damage limit. The damage to Mr. Jones' car is also covered, after his deductible of $250 is applied. Therefore, the total payment is $21,500.

Part A of the personal auto policy would apply in which of the following situations? A) Insured's 13-year-old son who, while playing with the car, starts it and lets it roll into the street, damaging other parked cars. B) Driver using the insured vehicle to transport people for a fee. C) Driver who intentionally causes an accident. D) Garage mechanic while test-driving the insured's auto.

A) Insured's 13-year-old son who, while playing with the car, starts it and lets it roll into the street, damaging other parked cars.

Which of the following is NOT one of the requirements for a loss to be paid under the uninsured motorists coverage of the personal auto policy? A) Loss involves property damage to insured's auto. B) Insured is legally entitled to damages. C) Other vehicle meets policy's definition of uninsured vehicle. D) Loss is sustained by an insured.

A) Loss involves property damage to insured's auto. Under the standard personal auto policy, Part C applies only to bodily injury losses.

The covered auto is defined in the policy as all of the following EXCEPT: A) any additional auto acquired in the past 30 days. B) any auto shown in the declarations. C) any auto used as a temporary substitute while an insured auto is being repaired. D) any trailer owned by the insured or spouse.

A) any additional auto acquired in the past 30 days.

Which of the following is considered a uninsured/underinsured motor vehicle? A) A dune buggy used off-road. B) Car insured for less than the limits required by the state. C) Car owned by the state insurance department. D) Car furnished by an employer to an aunt living in the insured's household.

B) Car insured for less than the limits required by the state. Under Part C--Uninsured Motorist Coverage, the insured is paid damages for bodily injury caused by an operator of certain vehicles. It is not one owned or available for use by the insured or family member, owned by any government agency, or designed for use off public roads.

A major purpose of automobile insurance is to ensure that victims of automobile accidents are compensated for damage and injuries from those who cause accidents as a result of negligence. Which of the following is NOT an approach used to compensate accident victims? A) No-fault. B) Fair Credit Reporting Act. C) Unsatisfied judgment funds. D) Financial responsibility.

B) Fair Credit Reporting Act.

Mary was involved in an accident with a hit-and-run driver. Her car was damaged. Which of the following items would be covered under the collision coverage in the personal auto policy? A) Mary's luggage in the trunk is destroyed. B) The front windshield is shattered. C) The vehicle is stolen before the tow truck can tow it to the body shop. D) The vehicle is towed to the body shop.

B) The front windshield is shattered. Although glass breakage is covered under comprehensive coverage, if collision causes the breakage, the insured may elect to have it included in the collision coverage.

Craig was driving his family in his owned station wagon on vacation in Wisconsin when a deer ran out in the road and collided with the front end of the wagon. Craig had the car towed to the nearest town, where the only car repair shop told him that it would take at least a week to get the parts to repair the engine. Craig's automobile policy provides coverage for transportation expenses. All of the following statements about transportation expenses are correct EXCEPT: A) the maximum coverage is $600. B) coverage starts 48 hours after a car is damaged by an other than collision loss. C) there is a $20 per-day limit for expenses. D) no deductible applies.

Coverage starts 48 hours after a car is damaged by an other than collision loss. With a theft loss, coverage is provided for substitute transportation beginning 48 hours after the theft. For all other covered collision or other than collision losses, coverage begins 24 hours after the loss.

Which one of the following principles is used to describe liability resulting from the negligence of a person who uses an auto with the insured's permission? A) Absolute liability. B) Strict liability. C) Implied liability. D) Vicarious liability.

D) Vicarious liability.

Every state requires that each person be able to prove he is financially prepared if involved in an accident. Suppose your state requires minimum liability limits of 25/50/10. What is the name of that law?

Financial responsibility law. The financial responsibility law in each state requires proof of financial responsibility if in an accident. Failure to provide proof may result in loss of license and/or vehicle registration. Each state requires a minimum limit, such as 25/50/10, or $25,000 bodily injury per person, $50,000 bodily injury per accident, and $10,000 property damage per accident.

The insured has an auto policy with liability limits of 30/60/10. He negligently runs off the road and causes $70,000 damage to an apartment building. How much will the policy pay for the damage to the building?

In the policy described, damage the policyholder causes to someone else's property is limited to $10,000.

In which of the following areas would PAP coverage typically NOT extend? A) Hawaii. B) Mexico. C) Puerto Rico. D) Canada.

Mexico PAP coverage applies to occurrences that take place within the United States, its territories and possessions (including Puerto Rico,) and Canada. The PAP generally does not provide coverage for vehicles operated in Mexico (although some insurers offer coverage for vehicles operating a short distance within the Mexican border).

Which one of the following auto policy coverages would pay for damage to the insured's car that the insured motorist caused by hitting a farmer's cattle while driving through the country? A) Other than Collision. B) Liability. C) Uninsured Motorists. D) Collision.

Other than Collision Other than collision coverage, also known as comprehensive coverage, protects against almost all accidental damage, with the exception of coverage provided under collision. Coverage includes losses due to fire, theft, explosion, earthquake, windstorm, missiles, falling objects, hail, water, flood, vandalism and malicious mischief, riot and civil commotion, glass breakage, and collision with birds or animals, wild or domestic.

If the insured hits a deer while driving his own vehicle, which part of the personal auto policy will pay to repair the vehicle?

Other than collision Part D--Coverage for Damage to the Insured's Auto provides two major types of coverage: collision and other than collision (comprehensive) coverage. Other than collision (comprehensive) coverage includes fire, theft, explosion, earthquake, windstorm, missiles, falling objects, hail, water, flood, vandalism and malicious mischief, riot and civil commotion, glass breakage, and collision with birds or animals, wild or domestic.

While driving to work, Leonard is eating his breakfast, reviewing his appointment book, and talking on his cell phone. He runs a red light and collides with a commuter van. The van's occupants are hospitalized. Which part of Leonard's personal auto policy covers the occupants' injuries and damage to the van?

Part A. Bodily injury and property damage to others is covered under Part A--Liability to Others Coverage when the accident is due to the insured's negligence.

The personal auto policy coverage applies to losses, accidents, or occurrences that take place during the policy period in all the following locations EXCEPT: A) San Juan, Puerto Rico. B) Phillipsburg, St. Martin. C) Alberta, Canada. D) Dover, Delaware.

Phillipsburg, St. Martin The personal auto policy provides coverage within the United States, its territories and possessions, Puerto Rico, and Canada. St. Martin is in the Dutch West Indies.

An insured rents a car while on vacation in Canada and causes an accident. What coverage is provided for this loss under the personal auto policy?

The loss is covered under an unendorsed policy. PAP coverage applies to losses, accidents, or occurrences that take place during the policy period and within the United States, its territories and possessions, or Canada, or while being transported between ports in any of those places. No additional endorsement is necessary while driving in Canada. The PAP covers liability for both unowned and owned vehicles.

Two personal auto policies cover one vehicle. Company A's limit of liability is $100,000 and Company B's limit of liability is $300,000. How much will Company A pay for a liability loss in the event of an accident when the damages total $100,000?

The other insurance clause for coverage A in the PAP applies on a pro rata basis. This means that if two or more policies cover one vehicle, each insurance company pays the portion that its policy limit bears to the total of all applicable limits. In this question there is $400,000 of total coverage (Company A's $100,000 + Company B's $300,000). This means that Company A has 1/4th of the total coverage in force ($100,000 is 1/4th of $400,000), which in turn means Company A would be responsible for paying 1/4th of the $100,000 loss, which equals $25,000.

If a California resident with a personal auto policy with the minimum liability limits has an accident in a state that requires higher limits, what will occur?

The policy will automatically provide the required higher limits at no extra charge.

If a vehicle is insured for collision, this coverage waives the deductible. What is this coverage?

UMPD Some states require insurers to offer uninsured motorist property damage (UMPD). It covers the physical damage to a car caused in an accident qualifying under uninsured motorist. If the insured has collision coverage, the UMPD acts as the collision deductible. The insured is then relieved from paying the deductible.

Under the medical payments coverage of a personal auto policy, the insurer pays for medical expenses and funeral services incurred within how many years from the date of an accident?

Under Part B--Medical Payments Coverage, the insurer pays for reasonable expenses for necessary medical and funeral services incurred within 3 years from the date of an accident without regard to fault.

A personal auto policy provides coverage for all for the following drivers of an insured car EXCEPT: A) the insured's spouse. B) the insured's child who attends school in another state. C) a thief who steals the car. D) a neighbor who uses the car with the insured's permission.

a thief who steals the car

All of the following are excluded under collision or other than collision coverages EXCEPT: A) road damage to tires. B) damage to awnings, cabanas, or other equipment. C) flood damage. D) damage due to wear and tear.

flood damages Flood damage to a vehicle is not excluded under the other than collision coverage.

The commercial auto policy offers physical damage coverage. One of the coverages is comprehensive. All of the following causes of loss are specifically covered under comprehensive EXCEPT: A) flood. B) earthquake. C) theft. D) freezing.

freezing Freezing is specifically excluded under comprehensive coverage. Other exclusions include nuclear explosion, radiation, war, racing, wear and tear, and blowout, punctures, or other road damage to tires.