4 Part F - General Provisions Quiz

The conditions under which the insurer can nonrenew a Personal Auto Policy (PAP) vary according to the length of the policy period. If the policy period is less than six months, the insurer Select one: A. Has the right to nonrenew every six months, beginning six months after the policy's original effective date. B. Has the right to nonrenew every year, beginning twelve months after the policy's original effective date. C. Has the right to nonrenew every 60 days. D. Does not have the right to nonrenew.

A. Has the right to nonrenew every six months, beginning six months after the policy's original effective date. CorrectCorrect. The conditions under which the insurer can nonrenew a Personal Auto Policy (PAP) vary according to the length of the policy period. If the policy period is less than six months, the insurer has the right to nonrenew every six months, beginning six months after the policy's original effective date.

Under the Personal Auto Policy (PAP), the named insured's rights and duties under the policy Select one: A. Can be assigned to another party without the insurer's written consent. B. Cannot be assigned to another party without the insurer's written consent. C. Can be transferred if the insured sells an auto. D. Can be transferred by a verbal agreement.

B. Cannot be assigned to another party without the insurer's written consent. CorrectCorrect. Under the Personal Auto Policy (PAP), the named insured's rights and duties under the policy cannot be assigned to another party without the insurer's written consent.

If an insured deliberately leaves his or her auto in an urban area, unlocked, with the keys in the ignition, and later claims that the car has been stolen, the insurer discovering these facts will Select one: A. Invoke the automatic termination provision in the policy. B. Deny coverage for the claim on the basis of the fraud condition. C. Subrogate against the insured. D. Invoke the appraisal provision in the policy.

B. Deny coverage for the claim on the basis of the fraud condition. CorrectCorrect. The insurer discovering these facts will deny coverage for the claim on the basis of the fraud condition.

Which one of the following statements is true regarding cancellation of the Personal Auto Policy (PAP)? Select one: A. An insurer cannot cancel a policy for nonpayment of premium. B. Insurers can usually cancel a new policy that has been in force for less than a certain number of days (such as sixty days). C. In most states a verbal notice of cancellation is sufficient, provided notice is given 90 days prior to the cancellation. D. Whenever state laws and policy cancellation provisions conflict, the policy provisions supersede the state law.

B. Insurers can usually cancel a new policy that has been in force for less than a certain number of days (such as sixty days). CorrectCorrect. Insurers can usually cancel a new policy that has been in force for less than a certain number of days (such as sixty days).

The Bankruptcy of Insured provision of the Personal Auto Policy (PAP) states that if the insured declares bankruptcy or becomes insolvent, the insurer is Select one: A. Relieved of obligations under the policy. B. Not relieved of any obligations under the policy. C. Required to pay more than its obligations under the policy. D. Not allowed to recover damages from a third party that is legally liable for a loss.

B. Not relieved of any obligations under the policy. CorrectCorrect. The Bankruptcy of Insured provision of the Personal Auto Policy (PAP) states that if the insured declares bankruptcy or becomes insolvent, the insurer is not relieved of any obligations under the policy.

A policy condition providing that if a policy form is broadened at no additional premium, the broadened coverage automatically applies to all existing policies of the same type is known as the Select one: A. Broadened coverage clause. B. Subrogation clause. C. Liberalization clause. D. Automatic coverage clause.

C. Liberalization clause.

If the insurer makes a loss payment to a person who has a right to recover damages from a negligent third party, the insurer has which one of the following legal rights against that third party? Select one: A. Estoppel B. Salvage C. Subrogation D. Loss mitigation

C. Subrogation CorrectCorrect. Subrogation is a right against the third party.

An insurer's right to recover payment from a legally liable third party is Select one: A. Appraisal. B. Assignment. C. Adherence. D. Subrogation.

D. Subrogation. CorrectCorrect. An insurer's right to recover payment from a legally liable third party is subrogation.

Under the Personal Auto Policy (PAP), legal action can be brought against the insurer only when Select one: A. Coverage has been denied. B. Insurance subrogation attempts have failed. C. The liability of the insured is involved. D. The insured has fully complied with all of the policy terms.

D. The insured has fully complied with all of the policy terms. CorrectCorrect. Under the Personal Auto Policy (PAP), legal action can be brought against the insurer only when the insured has fully complied with all of the policy terms.

The policy territory of the Personal Auto Policy (PAP) includes the United States, Select one: A. Puerto Rico and Mexico. B. Puerto Rico, Mexico, and Canada. C. U.S. territories and possessions, Mexico, and Canada. D. U.S. territories and possessions, Puerto Rico, and Canada.

D. U.S. territories and possessions, Puerto Rico, and Canada. CorrectCorrect. The policy territory of the Personal Auto Policy (PAP) includes the United States, U.S. territories and possessions, Puerto Rico, and Canada.

Under the Personal Auto Policy (PAP), which one of the following statements is true regarding the nonrenewal provisions for a policy that has a policy period of one year or longer? -The insurer has the right to nonrenew at the end of the policy period without giving notice. -The insurer has the right to nonrenew at each anniversary of the policy's original effective date. -The insurer has the right to nonrenew beginning six months after the original effective date. -The insurer cannot nonrenew a policy that has been in effect for more than one year.

The insurer has the right to nonrenew at each anniversary of the policy's original effective date.