Personal Auto Policy Questions

The CAARP Assigned risk plan provides personal auto coverage of 15/30/5 in liability plus what amount in optional medical payments? a. 1,000 b. $5,000 c. $10,000 d. $25,000

A. $1,000 Explanation Standard auto liability coverage is provided at limits of 15/30/5. Medical payments coverage of $1,000 per person is optional and applies on an excess basis.

Jack hit a deer with his car. He had a $250 deductible Collision coverage and $50 deductible Other Than Collision coverage. The damage to his car was $450. How much will his policy cover? a. $400 b. $200 c. $150 d. Nothing

A. $400 Explanation This loss is actually covered under Other Than Collision. Damage $450, minus $50 deductible for Other Than Collision, leaves $400 as the amount payable by the insurer.

California low-cost auto policies offer the following liability limits: a. 10/20/3 b. 10/15/5 c. 5/10/5 c. 15/30/5

A. 10/20/3 Explanation The available liability limits for low-cost policies are: $10,000 bodily injury for 1 person $20,000 bodily injury for 2 or more persons in 1 accident $3,000 for property damage to others

Which of the following would not be included in coverage under a Personal Auto Policy? a. A motorcycle b. Any trailer that the insured owns c. A pickup truck with a gross vehicle weight of 7600 pounds d. An eight passenger van with a gross vehicle weight of 7600 pounds

A. A Motorcycle Explanation Generally, vehicles that have fewer than 4 wheels are excluded from coverage

All of the following are true about eligibility for Low-Cost Auto Insurance in California, except: a. A driver must have been licensed to drive for 5 years before applying b. A driver must be at least 16 years of age c. A driver cannot have had any at-fault accidents involving bodily injury or death within 3 years preceding the date of application d. A driver must live in a household whose gross annual income does not exceed 250% of the federal poverty level

A. A driver must have been licensed to drive for 5 years before applying Explanation Applicants must have 3 years of driving experience, or pay a surcharge.

Which of the following is not an insured under a Personal Auto Policy? a. A spouse living in a different household b. The resident teenage son of the insured who drives the vehicle without a licenses c. A spouse living in the same household d. A foreign exchange student living with the insured for the school year

A. A spouse living in a different household Explanation The spouse of the insured must reside in the same household for coverage to apply.

In California, after a Personal Auto Policy has been in effect for 60 days, an insurer may cancel for all of the following reasons, except: a. Accidents resulting in payments of $300,000 or more under bodily injury liability coverage b. Obtaining the policy through fraud or misrepresentation c. Nonpayment of premium d. A substantial increase in hazard

A. Accident resulting in payments of $300,000 or more under bodily injury liability coverage Explanation An insurer may only cancel coverage for suspension or revocation of the insured's license, nonpayment of premium, a substantial increase in hazard, or if the policy was obtained through fraud or misrepresentation, if the policy has been in effect 60 days of more.

All of the following are true of Part A automobile liability coverage, except: a. It is written on an aggregate limit basis b. It protects the insured for losses when the insured is legally liable c. It provides third party protection d. It may be written either split or single limit

A. It is written on an aggregate limit basis Explanation The insurer's liability under personal auto policies is limited only by per person/per occurrence limits.

Under Part F - General Provisions of the Personal Auto Policy, the Legal Action Against Us states that: a. Legal action may not be brought against the insurer until the insured has complied with all the terms of the policy b. Legal action brought against the insurer must be brought within 90 days of the loss c. Legal action against the insurer is permitted only when arbitration is unsuccessful d. Legal action brought against the insurer must be brought within 180 days of the loss

A. Legal action may not be brought against the insurer until the insured has complied with all the terms of the policy Explanation It is very important in this, as in other insurance, that the insured comply with all the terms of the policy if there is any possibility that legal action may be taken.

The Miscellaneous Type Vehicle Endorsement attached to a Personal Auto Policy allows coverage for a motorcycle by: a. Providing an expanded definition of covered auto b. Adding motorcycles to the list of eligible vehicles c. Specifically naming it in the declarations d. Altering the four-wheel requirement

A. Providing an expanded definition of covered auto Explanation The endorsement amends the definition of covered vehicle to include motorcycles

A person may obtain a Good Driver Discount if he/she has at least 3 years of licensed driving experience and has not accumulated more than one driving violation 'point' during what time period? a. The previous 3 years b. The previous 2 years c. The previous year d. The previous 5 years

A. The previous 3 years Explanation A person may obtain a Good Driver Discount if he/she has been licensed to drive a motor vehicle for the last 3 years and has not accumulated more than one driving violation 'point' during that time.

Under the Personal Auto Policy, which of the following is correct when there are two or more auto policies on the same auto? a. When issued by the same insurer, and all policies cover the same accident, the maximum that will be paid is equal to the policy with the highest limit b. Each policy will pay the loss independently of the other c. Each policy will share equally in the loss d. This policy will be excess if the other policy is in a different insurer

A. When issued by the same insurer, and all policies cover the same accident, the maximum that will be paid is equal to the policy with the highest limit Explanation The Two or More Auto Policies provision of the Personal Auto Policy is intended to prevent the stacking of limits if more than one policy issued by the insurer applies to the same accident.

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

B. $250 for bail bonds Explanation Of the items listed, only $250 for bail bonds is a supplementary payment.

Under a policy with limits of $25,000 bodily injury per person, $50,000 bodily injury per accident and $10,000 property damage per accident; what would be the insurer's liability arising out of an accident where claimant A has injuries of $35,000 and property damage in the amount of $15,000? a. $15,000 b. $35,000 c. $50,000 d. $25,000

B. $35,000 Explanation The policy would pay up to the Bodily Injury of $25,000 + $10,000 for property damage = $35,000

Named Non-Owner Personal Auto Policy would be ideal for whom? a. A business that owns a fleet of vehicles it allows its employees to drive on company or personal business b. A person who does not own a vehicle but frequently drives a borrowed or rented auto c. A person who owns a vehicle but allows his next-door neighbor to use on a long-term basis d. An unlicensed driver who owns a vehicle

B. A person who does not own a vehicle but frequently drives a borrowed or rented auto Explanation In order to satisfy state financial responsibility laws, a person who frequently drives borrowed or rented autos could have a named non-owner auto policy.

All of the following are true about a newly acquired additional vehicle, except: a. Coverage will be as broad as the broadest coverage on any vehicle in the household insured by the insurer b. Can be used to transport goods for hire if receipts are less than $10,000 c. Must be reported to the insurer within the specified period d. May be used on a farm

B. Can be used to transport goods for hire if receipts are less than $10,000 Explanation Vehicles used as a common (public) carrier or livery for hire cannot be insured under a Personal Auto Policy.

Under Part D - Coverage for Damage to Your Auto of the Personal Auto Policy, vehicle upset or its impact with another vehicle or object would be covered under: a. Other than Collision b. Collision c. Transportation Expenses d. Comprehensive

B. Collision Explanation As defined in the policy, Collision means the upset of the covered auto or a non-owned auto or their impact with another vehicle or object.

Which of the following is correct regarding Uninsured Motorists Coverage under the Personal Auto Policy? a. It provides coverage for the driver of an uninsured automobile that is involved in an accident with the insured automobile b. It covers bodily injury (BI) of an insured due to an accident caused by the driver of an uninsured vehicle c. It covers bodily injury to the insured and property damage to the insured's property due to an accident caused by the driver of an uninsured vehicle d. It covers damage to the insured's vehicle due to an accident caused by the driver of an uninsured vehicle

B. It covers bodily injury (BI) of an insured due to an accident caused by the driver of an uninsured vehicle Explanation The purpose of Uninsured Motorists Coverage is to provide coverage for an insured injured in an accident that is the fault of the operator of an uninsured motor vehicle.

Which of the following best describes the Towing and Labor Costs Coverage Endorsement to the Personal Auto Policy? a. It provides coverage for Labor Costs, but not Parts, involved in repairing the vehicle whenever necessary b. It provides payment for towing to a garage, or for labor that is performed at the site of a mechanical disablement (not both at the same breakdown) c. It provides coverage for Towing Charges incurred in towing the disabled vehicle to the insured's home d. It provides coverage for towing the covered auto when it is involved in a collision

B. It provides payment for towing to a garage, or for labor that is performed at the site of a mechanical disablement (not both at the same breakdown) Explanation Towing and Labor Costs Coverage is available by endorsement to the policy to provide coverage for these costs when caused by a mechanical disablement.

The Personal Auto Policy applies: a. Anywhere in the world b. Only in the U.S., its territories, Canada, and Puerto Rico c. Only in the U.S., its territories, Canada, Puerto Rico, and Mexico d. Only in the U.S. and its territories

B. Only in the U.S., its territories, Canada, and Puerto Rico Explanation Coverage does not extend to Mexico except on an excess basis with restrictions. It is a crime to drive a vehicle anywhere in Mexico without a valid Mexican Auto Insurance policy issued to the vehicle.

When an auto has coverage under two or more auto policies (or under more than one part of a single policy) with the same insurer, the insurer's liability would be: a. The limit of the first one purchased b. The highest limit of the two c. The limit of the last one purchased d. The combined limit of the two

B. The highest limit of the two Explanation Coverage will not be duplicated, so the policy (or coverage part) with the highest limit applies. California law prohibits 'stacking' liability coverage under multiple policies from the same insurer, but this is not the same in all states. When California primary coverage is provided by multiple insurers, claims are prorated among the available policies.

The liability limits for low-cost policies in California are: a. 5/10/5 b. 10/15/5 c. 10/20/3 d. 15/30/5

C. 10/20/3 Explanation The available liability limits for low-cost policies are: $10,000 bodily injury for 1 person $20,000 bodily injury for 2 or more persons in 1 accident $3,000 for property damage to others

In California, insurers must give at least _____ days' notice before the end of the policy period in the case of nonrenewal of the Personal Auto Policy. a. 10 b. 20 c. 30 d. 60

C. 30 Explanation Insurers must give at least 30 days' notice for nonrenewal

All of the following are defined as insured under Part A of the Personal Auto Policy, except: a. The Named Insured b. Anyone using the covered automobile with permission c. A mechanic who is test driving an insured auto d. Any Family Member of the Named Insured

C. A mechanic who is test driving an insured auto Explanation These definitions of insured are the definitions set forth in the Liability Coverage of the Personal Auto Policy.

Marla and Cindy both have Personal Auto policies. If Marla borrows Cindy's car and runs over a pedestrian, which policy will provide bodily injury coverage for the injured party? a. Neither; bodily injury is for occupants only b. They will prorate the expenses c. Cindy's policy d. Marla's policy

C. Cindy's Policy Explanation Personal insurance follows the item insured, in this case, the vehicle. Cindy's coverage is primary; Marla's coverage would apply on an excess basis if the total claims exceeded Cindy's liability limits

Under Part D - Coverage for Damage to Your Auto of the Personal Auto Policy, vehicle upset or its impact with another vehicle or object would be covered under: a. Other than Collision b. Comprehensive c. Collision d. Transportation Expenses

C. Collision Explanation As defined in the policy, Collision means the upset of the covered auto or a non-owned auto or their impact with another vehicle or object.

Which of the following is covered under coverage for damage to your auto? a. Damage to unreported custom equipment on a pickup or van b. Damage to a radar detector c. Flood damage to a convertible when the top is left down d. Theft loss to a portable CD player

C. Flood damage to a convertible when the top is left down Explanation Flood damage is covered under Other Than Collision coverage

Which of the following statements is true in California? a. The California Automobile Assigned Risk Plan is available only to residents of Los Angeles and San Diego counties b. Only carriers writing 10% or more of the automobile insurance business in the State of California are required to participate in the California Automobile Insurance Plan c. GAP Insurance insures for the difference between what the insured owes on a vehicle, and what the insurer says the vehicle's actual cash value or worth is, in the event of a total loss d. Medical payments coverage of $5,000 per person is required under the California Automobile Insurance Plan, and applies on a primary basis

C. GAP Insurance insures for the difference between what the insured owes on a vehicle, and what the insurer says the vehicle's actual cash value or worth is, in the event of a total loss Explanation CAARP is statewide; all admitted auto liability carriers in the state are required to participate; and medical payments coverage is optional, is limited to $1,000, and applies on an excess basis.

California Proposition 103 legislation addressed which of the following? a. Commercial Package Policy - Earthquake Cause of Loss Form b.Boiler and Machinery Equipment Breakdown Coverage Form c. Good Driver Discount Policy d. Homeowners Comprehensive Form (HO-5)

C. Good Driver Discount Policy Explanation Proposition 103 addressed the Good Driver Discount Policy

Under Uninsured Motorist Coverage of the Personal Auto Policy, which of the following defines insured? a. The operator of an uninsured motor vehicle involved in an accident with the insured b. The named insured, a family member, or any other person occupying an uninsured auto c. The named insured, a family member, or any other person occupying the insured auto d. The owner of an uninsured motor vehicle involved in an accident with the insured

C. The named insured, a family member, or any other person occupying the insured auto Explanation Uninsured Motorists Coverage, in effect, acts as the Automobile Liability coverage for an uninsured vehicle involved in an accident with an automobile occupied by the insured or a family member. However, it provides no protection for the owner or operator of the uninsured auto.

In California, if the insured does not have Other Than Collision Coverage on at least one auto listed on the Declarations Page of his Personal Auto Policy, then Other Than Collision Coverage on a newly acquired auto begins on the date the insured becomes the owner, provided that the insured requests such coverage within _____ days of becoming the owner. a. 10 b. 14 c. 3 d. 4

D. 4 Explanation The request must be made within 4 days

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. Immediately c. 72 hours d. 48 hours

D. 48 hours Explanation Transportation Expenses Coverage pays $20 per day, up to $600, for transportation expenses incurred due to total theft of the covered auto. Coverage begins 48 hours after the theft.

In the Personal Auto Policy, the definition of Family Member includes: a. Persons related to the Named Insured who have frequent use of the insured automobile b. A member of the Named Insured's immediate family, regardless of place of residence c. Any person using the insured automobile with the Named Insured's permission d. A person related by blood, marriage or adoption who is a resident of a household (including a foster child)

D. A person related by blood, marriage or adoption who is a resident of a household (including a foster child) Explanation Persons who qualify as a Family Member must reside in the household.

Under Liability Coverage of the Personal Auto policy, which of the following would be covered? a. Damage to property being transported by the insured b. Damage to the home the insured owns c. Damage to a neighbor's lawn mower in the care of the insured d. Damage to a rental car rented to the insured

D. Damage to a rental car rented to the insured Explanation Liability coverage for property rented to, or in the care, custody, or control of the insured is very limited.

Which of the following endorsements would cover the named insured and family members who use a company vehicle that is furnished for the named insured's regular use? a. Miscellaneous Type Vehicle Endorsement b. Named Non-Owner Coverage c. Joint Ownership Coverage d. Extended Non-Owned Coverage for Named Individual

D. Extended Non-Owned Coverage for Named Individual Explanation Extended Non-Owned Coverage for Named Individual provides this coverage. This coverage may also be used to provide excess coverage for business use of a non-owned commercial vehicle or private-passenger vehicle used as a common carrier or livery.

Which of the following is true regarding Medical Payments of the Personal Auto Policy? a. The liability limit shown in the Declarations is the maximum the policy will pay for all claims during the policy term b. The liability limit shown in the Declarations is the maximum the policy will pay for each person during the policy term c. The liability limit shown in the Declarations is the maximum the policy will pay for all persons injured in any one accident d. The liability limit shown in the Declarations is the maximum the policy will pay each person injured in any one accident

D. The liability limit shown in the Declarations is the maximum the policy will pay each person injured in any one accident Explanation The Medical Payments limit is a per person limit that applies to each accident.

If a bird hits a windshield and breaks it, under a Personal Auto Policy the loss would be paid: a. Under the collision part b. Under the Supplementary Coverage part c. Under the Bird Collision Part d. Under the Other Than Collision coverage part

D. Under the Other Than Collision coverage part Explanation Coverage for colliding with a bird or animal is under Other Than Collision coverage.

Duties After a Loss - Part E of the Personal Auto Policy states that after a loss the insured must: a. Immediately initiate repairs to the vehicle to protect it 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. When making a claim under Part D, protect the auto from further damage, notify the police promptly if the vehicle was stolen, and allow the insurer to inspect and appraise the damaged vehicle before repairs are made

D. When making a claim under Part D, protect the auto from further damage, notify the police promptly if the vehicle was stolen, and allow the insurer to inspect and appraise the damaged vehicle before repairs are made Explanation Part E - Duties After a Loss, sets the duties of the insured seeking coverage under Coverages A, B, and C, and duties of the insured seeking coverage under Coverage D.

Which of the following is true regarding the Personal Auto Policy on Out of State coverage? a. When being used in any state other than the one in which the vehicle is licensed, the liability limits are automatically the minimum financial responsibility limits of the state in which the vehicle is licensed. b. The liability limits of the policy remain the same regardless of where the vehicle is used c. The insured should be sure that the liability limits of the policy equal or exceed the minimum limits of the compulsory insurance or financial responsibility laws of any other state where the vehicle might travel d. While the covered auto is away from the state where it is licensed, the policy will increase the Limit of Liability insurance to comply with any compulsory insurance or financial responsibility law in the state where the covered auto is being used

D. While the covered auto is away from the state where it is licensed, the policy will increase the Limit of Liability insurance to comply with any compulsory insurance or financial responsibility law in the state where the covered auto is being used Explanation When the covered auto is operated in a state other than that in which it is licensed, the limits of the policy are automatically increased to comply with the financial responsibility law or the compulsory insurance law of the state in which it is being operated.