Auto Insurance
Kim was stopped at a red light when she was rear-ended by Paige, who didn't have auto liability insurance. Kim's car sustained $3,000 in damages and she suffered $1,000 of bodily injury. Her uninsured motorists limits of liability are $15,000 per person for bodily injury and $30,000 per accident for bodily injury. How much will her UM coverage pay for her loss? $0 $1,000 $3,000 $4,000
$1,000 Because Kim's UM coverage only provides insurance for bodily injury, it will not pay for the damage to her vehicle.
With the personal auto policy (PAP), the limit of liability for a loss to a borrowed or rented trailer is: $1,000 $1,500 $2,000 $2,500
$1,500
Smith Motors has garagekeepers coverage with a $500 per auto deductible and a $2,500 maximum deductible per loss. Vandals break in and damage ten vehicles, causing $400 in damage to each vehicle for a total loss of $4,000. How much of that total loss will Smith pay as the deductible? $0 $1,500 $2,500 $4,000
$2,500
Abbey's station wagon was stolen on July 6 and she immediately reported the theft to her insurer. Her business auto policy's physical damage coverage will pay for transportation expenses. She immediately rents a replacement auto for $25 a day and keeps it until July 29, when her stolen auto is returned to her. What is the maximum amount her insurer will pay for this transportation expense? $575 (23 days × $25) $525 (21 days × $25) $460 (23 days × $20) $420 (21 days × $20)
$420 (21 days × $20)
Fran's personal auto policy (PAP) lists her three autos. Each has uninsured motorists coverage with a $50,000 limit. Fran is permanently disabled by injuries she receives while riding in a friend's car that is struck by a hit-and-run driver. How much can Fran expect to collect under her PAP's uninsured motorists coverage? $50,000 $150,000 $100,000 nothing
$50,000
Travis is insured under a personal auto policy (PAP) with a combined single limit of $75,000 for Part A. He is involved in an auto accident that causes $35,000 of bodily injury and $60,000 of property damage. What is the maximum amount his insurer will pay for the accident? $35,000 $50,000 $60,000 $75,000
$75,000
An insurer that does not wish to renew a PAP must give advance notice to the insured of at least 30 days. 20 days. 10 days. 45 days.
20 days. An insurer may refuse to renew a PAP with at least 20 days' written notice to the insured.
While the business auto policy (BAP) coverage territory is limited to the United States, its territories, Puerto Rico, and Canada, it also covers a private passenger auto that the insured rents anywhere in the world for: 7 days or less 21 days or less 30 days or less 60 days or less
30 days or less
With respect to the pollution exclusion under the business auto policy (BAP), in which of the following cases would the BAP cover liability arising from the escape of pollutants? A covered delivery truck discharges diesel fuel into a stream when its fuel tank is ruptured in an accident, resulting in an EPA clean-up of the stream. An insured SUV spills a barrel of cleaning solvent it was transporting from a warehouse to a worksite, requiring extensive cleanup of the surrounding neighborhood. A container of toxic chemicals being transported for an insured falls off the delivery truck and spills across a street intersection, forcing closure of the intersection. A container of herbicide stored in the bed of a covered pickup truck develops a leak which results in the herbicide leaking into the town's sewerage treatment facility.
A covered delivery truck discharges diesel fuel into a stream when its fuel tank is ruptured in an accident, resulting in an EPA clean-up of the stream.
With respect to the garage policy, which of the following situations would NOT be covered under the liability section? A customer's car on the garagekeeper's lot is damaged by a neighbor's falling tree. A customer slips and falls on a wet floor of the garagekeeper's shop. The brake shoes replaced on a customer's car by the garagekeeper fail and cause a crash. An independent contractor hired by the garagekeeper to repair the shop's ceiling drops a tool, striking and injuring a customer.
A customer's car on the garagekeeper's lot is damaged by a neighbor's falling tree.
How much advance notice must an insurance company give its policyholder before it cancels a personal auto policy? At least 14 days At least 10 days At least 7 days At least 3 days
At least 10 days Before an insurance company cancels a personal auto policy, it is required to give the policyholder at least 10 days' written notice in advance.
Uninsured motorists coverage applies to the named insured and family members who are injured by an uninsured motorist. Although Beverly has uninsured motorists coverage, it will NOT apply to: her resident husband, who is struck while a pedestrian by an auto driven by an uninsured motorist her aunt, who lives with Beverly and is injured when Beverly's car is struck by a car driven by an uninsured motorist her resident husband, who is injured while a passenger in a neighbor's uninsured car Beverly, who rear-ends an uninsured motorist
Beverly, who rear-ends an uninsured motorist
Jodie is distracted while driving her child to school. She collides with Emanuel's car and pushes it into a utility pole. Emanuel's car is damaged and the pole is destroyed. The accident causes a traffic jam that prevents other drivers from getting to work on time. Which claim on Jodie's personal auto policy does NOT involve property damage? the utility company's claim for destruction of its pole Emanuel's claim for expenses to rent a car Emanuel's claim for damage to his car claims for lost wages by drivers who were late to work
Emanuel's claim for damage to his car The claims for lost wages by drivers stuck in a traffic jam are not concrete and measurable, and are therefore not covered as property damage under a personal auto policy.
In which case will Evelyn's PAP's medical payments coverage NOT protect the injured person? Evelyn is injured in an auto accident that she caused. Evelyn is injured in an auto accident that someone else caused. Evelyn's car strikes a jaywalking pedestrian. Evelyn's passengers are injured in an auto accident that was not Evelyn's fault.
Evelyn's car strikes a jaywalking pedestrian. The named insured, family members, and occupants of Evelyn's auto are protected persons, but the pedestrian is not. However, Evelyn's liability coverage will apply if the accident is her fault.
Riley's coupe is insured with a personal auto policy that includes liability, uninsured motorists, and other-than-collision coverages. He buys a new sedan and wants collision coverage on it. Which statement is true about this coverage? He must notify the insurer about the newly acquired sedan within four days. The PAP automatically covers the sedan if he reports it to the insurer after owning it for two or three weeks. The PAP does not cover the automatic coverage for the Honda. The sedan automatically has collision coverage for the rest of the policy period.
He must notify the insurer about the newly acquired sedan within four days. Because Riley's coupe does not have collision coverage, he must report the newly acquired sedan to his insurer within four days of its acquisition to get collision coverage for it.
When broken glass is among the damage resulting from the collision of a covered auto, the insured may choose to have the glass breakage covered as part of the collision loss. What is the purpose of this provision? It simplifies the claim process. It allows the insured to avoid paying separate comprehensive and collision deductibles. It is required by state statute. It is a gesture of goodwill on the part of the insurer.
It allows the insured to avoid paying separate comprehensive and collision deductibles.
Which of the following correctly describes the basic purpose of the MCS-90 endorsement? It confirms that the trucker is an approved motor carrier. It confirms that the trucker is a for hire carrier. It certifies that the trucker has completed the required driver safety courses. It amends the truckers auto liability policy to comply with requirements of the Motor Carrier Act of 1980.
It amends the truckers auto liability policy to comply with requirements of the Motor Carrier Act of 1980.
How does the business auto policy (BAP) respond when an employee is driving the employer's delivery truck and is involved in an accident that doesn't hurt the driver but does injure a co-worker who is a passenger in the vehicle? It pays promptly. It pays subject to the deductible. It denies coverage under the contractual liability exclusion. It denies coverage under the fellow employee exclusion.
It denies coverage under the fellow employee exclusion.
Percy injured his knee in an auto accident five years ago when he was a passenger in his girlfriend's car. He just received follow-up treatment for his knee and submits the bill to his girlfriend's insurance company. How does the auto policy respond? It pays the bill. It pays the bill subject to a $500 deductible. It doesn't pay the bill because Percy wasn't an "insured" at the time of the accident. It doesn't pay the bill because it wasn't incurred within three years of the accident.
It doesn't pay the bill because it wasn't incurred within three years of the accident.
Sylvia is at fault for an auto accident with Lucien in which Sylvia is injured. She has no health insurance, and Lucien has no auto insurance. What is correct about the uninsured motorists coverage of Sylvia's personal auto policy (PAP)? It will pay Sylvia's medical bills because she has no health insurance. It will pay Sylvia's medical bills because Lucien is uninsured. It will pay Lucien's medical bills because he was not at fault. It will not pay Sylvia's medical bills because she was at fault.
It will not pay Sylvia's medical bills because she was at fault.
Uninsured motorists coverage (UM) broadly covers the named insured and family members injured by an uninsured motorist. In which of the following situations would UM coverage NOT apply to Josephine and her family? Josephine is injured while walking across a street. Josephine is injured while a passenger in her friend's car. Josephine's daughter is injured while a passenger in Josephine's uninsured car. Josephine's husband is injured while a passenger in her covered auto.
Josephine's daughter is injured while a passenger in Josephine's uninsured car.
Melanie has an accident while driving Lee's car. Melanie is injured and incurs medical expenses of $5,000. She carries medical payments coverage with a limit of $5,000 in her personal auto policy. Lee has a limit of $2,500 medical payments coverage in his PAP. How are Melanie's medical expenses paid under these insurance policies? Each policy pays $2,500. Melanie's policy pays $5,000. Lee's policy pays its $2,500 limit; Melanie's policy pays the $2,500 difference. Melanie's policy pays $2,500; Lee's policy pays the $2,500 difference.
Lee's policy pays its $2,500 limit; Melanie's policy pays the $2,500 difference.
Lillian is unemployed and has only enough auto insurance to comply with her state's compulsory insurance law. She is responsible for an accident in another state that requires higher limits. What protection, if any, does her personal auto policy (PAP) provide? Lillian has no liability coverage in the other state. The other state's required limits are reduced to meet her liability limits. Lillian's liability limits are automatically increased to comply with the other state's requirements. If the claim exceeds the limits of her policy, Lillian must make up the difference between her limits and the other state's minimum limits.
Lillian's liability limits are automatically increased to comply with the other state's requirements. The PAP's out-of-state coverage automatically increases the insured's liability coverage, if necessary, to comply with the laws of a state in which the insured vehicle is driven.
Matt's auto insurer denied a liability claim because the person seeking reimbursement is not an "insured" under Section A - Liability of Matt's auto policy. Which of the following submitted the claim? Matt's roommate, after he totaled his own uninsured car Matt's resident wife, after she crashed her friend's car Matt's boss, after he wrecked Matt's car Matt's resident daughter, after her rental car was stolen
Matt's roommate, after he totaled his own uninsured car
Maurice's personal auto policy (PAP) on the family car lists him as the named insured. His wife, Sondra, is involved in an accident while using the car as a Charity Organization volunteer. The injured parties sue Maurice, Sondra, and Charity Organization. Which is insured under the policy's liability coverage? Maurice Maurice and Charity Organization Maurice and Sondra Maurice, Sondra, and Charity Organization
Maurice, Sondra, and Charity Organization Sondra is a named insured by virtue of her marriage to Maurice, who is named in the policy. Charity Organization is an insured because it may be held liable for an insured's use of the named insured's covered auto.
Jenny's business auto policy (BAP) will cover accidents and losses that occur while she is driving her auto in all of the following locations EXCEPT: U.S. Virgin Islands Mexico City, Mexico San Juan, Puerto Rico Montreal, Canada
Mexico City, Mexico
Orlando and Monroe have personal auto policies (PAPs). Wanting to race but fearful of risking damage to their cars, they each steal a car. Monroe's stolen car collides with Orlando's stolen car, injuring Orlando. What insurance, if any, will cover Orlando's medical bills? The uninsured motorists coverage on the stolen car Orlando was driving applies. No PAP covers injury sustained by the driver of a stolen car. Orlando's PAP's uninsured motorists coverage applies. Monroe's PAP's liability insurance applies.
No PAP covers injury sustained by the driver of a stolen car.
Mrs. Quayle is using her covered auto for work when she rear-ends a school bus on her way to a business meeting. Does the medical payments coverage on her personal auto policy provide coverage for her injuries? Yes, her negligence doesn't matter. No, she was negligent. Yes, medical payments coverage provides no-fault benefits. No, she was on the job and would be eligible for workers compensation benefits.
No, she was on the job and would be eligible for workers compensation benefits.
Nate, a small business owner, bought a delivery van last year from Discount Auto Sales. Since then, he has spent a lot of money to repair the van. When he gets the latest repair bill from Discount, he loses his temper and drives the van through the plate glass window of the dealer's showroom. Will Nate's business auto policy cover Discount's claim for property damage? Yes, the business auto policy provides coverage for property damage liability. No, the expected or intended exclusion will rule out coverage. Yes, but on an excess basis because the dealer's property coverage is primary. No, the contractual liability exclusion will rule out coverage.
No, the expected or intended exclusion will rule out coverage.
Michel was unemployed and driving without auto insurance when he struck Norma's car, injuring her. Norma has a personal auto policy. No-fault insurance laws do not apply. How will Norma's medical bills most likely be paid? Norma must rely on any available health insurance to pay the bills. Norma's underinsured motorists coverage will pay the bills. Norma's uninsured motorists coverage will pay the bills. Norma must pay the bills.
Norma's uninsured motorists coverage will pay the bills. Uninsured motorists coverage protects insureds from financially irresponsible drivers who do not have auto liability insurance and cannot compensate those they injure in an accident.
How does medical payments coverage under the personal auto policy differ from medical payments coverage under a homeowners policy? Homeowners policies cover medical payments for third parties and members of the insured's family. PAPs cover medical payments for third parties. PAPs cover medical payment for third parties and resident members of the insured's family. Homeowners policies cover medical payments for third parties. Both policies cover medical payments on the same basis. Neither policy covers medical payments for family members.
PAPs cover medical payment for third parties and resident members of the insured's family. Homeowners policies cover medical payments for third parties.
For which one of the following personal auto policy (PAP) coverages would the policy's deductible apply in the event of a covered loss? Part A - Liability Part B - Medical Payments Part C - Uninsured Motorists Part D - Collision
Part D - Collision
Which of the following correctly describes the premium grace period of a personal auto policy? Personal auto policies do not have a premium grace period. Personal auto policies have a standard 10-day grace period that can be extended upon request by the policyowner. Personal auto policies have a standard 31-day grace period that cannot be extended. Personal auto policies have a premium grace period that varies by state.
Personal auto policies do not have a premium grace period.
Porter is the named insured in the declarations of a personal auto policy. He lives with his wife, Anne, who also drives the insured auto. Anne is NOT a named insured in the declarations, but Porter understands that, as his spouse, she is also covered by this policy. Which statement is correct if Porter names her in the declarations? She will have additional rights. She will have additional privileges. She will have additional protection. She will have no additional rights, privileges, or protection.
She will have no additional rights, privileges, or protection.
Sheila's personal auto policy (PAP) includes uninsured motorists coverage. Which accident involving Sheila involved an insured motor vehicle? Sheila collided with a tree with a rented car for which she did not have insurance coverage. Sheila's car was struck by a vehicle whose driver did not stop to identify himself. A driver who collided with Sheila's identified himself and his insurance company, which has since become insolvent. A driver without auto liability insurance struck Sheila's car.
Sheila collided with a tree with a rented car for which she did not have insurance coverage. An uninsured motor vehicle has a driver with no liability insurance, is involved in a hit-and-run accident, or has applicable liability coverage from an insolvent insurer.
The business auto policy uses a distinctive approach on the declarations page to indicate the coverages that apply to a specific insured. Specifically, how does the policy indicate this coverage for each vehicle? It lists covered autos with liability limits and premium charges on a separate sheet. An initial premium is charged for coverage; an audit at the end of the policy period results in a more accurate premium charge. Symbols are used to designate the vehicles covered and the coverages that apply. The agent personally inspects the insured vehicles to verify the information the insured provided on the application.
Symbols are used to designate the vehicles covered and the coverages that apply.
Janine buys a new car and a personal auto policy to insure it. However, she forgets to cancel the policy she already owns. How will the insurers treat this situation? The policies will coordinate any benefits they pay. The automatic termination provision in her first policy will terminate the policy on the effective date of the replacement policy. Both policies will be in effect until the first policy expires. The automatic termination provision in the second policy will terminate the second policy.
The automatic termination provision in her first policy will terminate the policy on the effective date of the replacement policy. The automatic termination provision, which prevents duplicate coverage on the same vehicle, will automatically terminate coverage in the original policy on the effective date of the replacement policy.
Lenny's auto insurance company responded to a lawsuit filed against him after he was involved in an accident. The insurer also hired an attorney to represent Lenny in court. For which of the following reasons would Lenny's insurer terminate its defense of the lawsuit? Lenny was at fault. Lenny was not at fault. Lenny didn't like the insurance company's attorney. The insurer paid the limit of liability on Lenny's policy.
The insurer paid the limit of liability on Lenny's policy.
Brian's car collides with Lola's car in the high school parking lot. She claims he hit her on purpose, but Brian insists the collision was accidental. What is true about his coverage under his PAP's liability insuring agreement? The insurer has no obligation to protect Brian against allegations of intentional damage or to pay any related damages. Brian's insurer will defend him and deny payment if it is determined that he accidentally collided with Lola. The insurer is not obligated to defend Brian against allegations of intentional damage, but it will pay for the damage if he proves the collision was accidental. The insurer will defend Brian and pay damages if coverage applies.
The insurer will defend Brian and pay damages if coverage applies. The duty to defend is broader than the duty to indemnify and extends to cases in which it is unclear whether coverage applies.
Tina borrows a neighbor's car to run a personal errand. She collides with another car and injures the other driver. The injured driver files a liability claim against Tina and the neighbor. Whose policy will handle the claim? Both policies will respond on a pro rata basis. Since Tina was at fault, only her policy will respond. The neighbor's policy will be primary; Tina's policy will be excess. Tina's policy will be primary; the neighbor's policy will be excess.
The neighbor's policy will be primary; Tina's policy will be excess.
Osvaldo and his insurer agree to submit their dispute to arbitration, What can they expect from the arbitration? The panel will consist of three experts. They can choose the state law that will govern the outcome. A court of law will rule on the outcome. The hearing will take place at the insurer's home office.
The panel will consist of three experts. The parties agree in writing to submit their disputes to a panel of three expert arbitrators who decide the matter. Each party selects an arbitrator, and the two arbitrators choose the third arbitrator.
Jasmine keeps her personal auto policy (PAP) in force because she is living in her car until she gets a job. While smoking in the car, she starts a fire that injures her. Why does the insurer deny her claim for medical payments? Jasmine must have a permanent address to file a claim. Jasmine did not have the proper PAP for a vehicle used as a residence. The incident did not involve the collision or upset of Jasmine's car. The policy excludes coverage for medical expenses incurred while the vehicle is used as a residence.
The policy excludes coverage for medical expenses incurred while the vehicle is used as a residence. The PAP excludes coverage for medical expenses for losses arising from use of a vehicle as a residence.
Which of the following correctly describes the difference between uninsured motorists coverage (UM) and underinsured motorists coverage (UIM)? The two coverages are identical, though the terms may vary from state to state. UM applies when the at-fault motorist does not have auto insurance; UIM responds when the at-fault motorist is insured with a liability limit less than the insured's UM/UIM limit. UIM applies when the at-fault motorist does not have auto insurance; UM responds when the at-fault motorist is insured with a liability limit less than the insured's UM limit. UM applies when the at-fault motorist has UM coverage; UIM responds when the at-fault motorist's UM limit is exceeded in paying the injured party.
UM applies when the at-fault motorist does not have auto insurance; UIM responds when the at-fault motorist is insured with a liability limit less than the insured's UM/UIM limit.
Mary loses control of her car and strikes Wilmer, a pedestrian. Mary suffers minor cuts and bruises. Katharine sees the accident and must seek psychiatric treatment for her resulting mental anguish. Because Mary's personal auto policy covers liability resulting from bodily injury, it will pay for: Katharine's psychiatrist bills but not Wilmer's doctor bills Mary's medical bills, but not Wilmer's or Katharine's bills Wilmer's doctor bills but not Katharine's psychiatrist bills Wilmer's doctor bills and Katharine's psychiatrist bills
Wilmer's doctor bills but not Katharine's psychiatrist bills Wilmer's bodily harm falls within the definition of bodily injury, but Katharine's mental anguish is neither physically manifested nor tangible, so it is not considered a bodily injury.
Mutual Insurance Co. initially approves auto insurance for Ralph, who admitted on the application to a speeding ticket two years ago. Three months later, Mutual discovers that Ralph got seven speeding tickets in the past two years. Mutual cancels Ralph's insurance. Can it legitimately do so? Yes, the insurer may cancel at any time if the policy was obtained through material misrepresentation. No, because it did not discover the speeding tickets within 60 days. No. If Mutual insured Ralph with one speeding ticket, it cannot cancel the policy for additional speeding tickets. Yes, any more than one speeding ticket is automatic grounds for cancellation.
Yes, the insurer may cancel at any time if the policy was obtained through material misrepresentation.
Carmella's personal auto policy describes some coverages for vehicles that are not included in the policy's definition of "your covered auto." Which vehicle is included in this definition? a boat trailer that she tows behind her truck her boyfriend's sports car that she borrows a utility trailer she borrows from a neighbor a coupe she rents during a vacation trip
a boat trailer that she tows behind her truck An owned trailer that is designed to be pulled behind a private passenger auto is within the definition of "your covered auto."
Besides serving as a stand-alone policy, business auto insurance can be included in which of the following? a personal auto policy (PAP) a personal injury protection (PIP) policy a commercial general liability (CGL) policy a commercial package policy
a commercial package policy
Mary's personal auto policy (PAP) provides uninsured motorists coverage that does NOT apply to injuries suffered by: passengers in Mary's car when it is struck by an uninsured motorist Mary when she is a pedestrian struck by an uninsured motorist a friend in whose car Mary is a passenger when it is struck by an uninsured motorist Mary while in a friend's car when it is struck by an uninsured motorist
a friend in whose car Mary is a passenger when it is struck by an uninsured motorist Uninsured motorists coverage protects the named insured and family members who are injured as pedestrians, as occupants of others' vehicles, and in their own covered autos. It also protects other occupants of the named insured's covered auto.
Because Leanne's personal auto policy (PAP) provides liability coverage on temporary substitute autos, it will protect her if she is driving: a church van because the usual driver is sick her sister's car out of the garage to make room for Leanne's car a delivery van for her employer a truck she borrows from a friend while Leanne's car undergoes repairs
a truck she borrows from a friend while Leanne's car undergoes repairs The truck is a temporary substitute auto because Leanne is using it while her car is temporarily out of operation while it undergoes repairs.
Pamela lives in a state with a financial responsibility law. When will she be required to prove she has auto liability insurance? after she registers the car with the state after it is involved in a serious traffic violation or accident. after her car undergoes a state inspection before it is involved in an accident
after it is involved in a serious traffic violation or accident. Financial responsibility laws require motor vehicle owners to furnish evidence of financial responsibility (usually by providing proof of insurance) after a serious traffic violation or accident.
Harriet's auto mechanic tells her state law requires him to use generic parts when repairing the collision damage her car sustained in a recent accident, despite the fact she wants him to use original equipment manufacturer (OEM) parts. What type of parts will the mechanic use to repair Harriet's car? replacement manufacturer parts market value parts aftermarket parts depreciated parts
aftermarket parts
Atlas Company has a business auto policy with symbol 1 designated for liability coverage. Which of the following types of vehicles would be covered under this symbol? owned and non-owned autos any auto, including owned, non-owned, or hired autos hired and non-owned autos owned autos only
any auto, including owned, non-owned, or hired autos
If the insurer intends to nonrenew personal auto policy (PAP) coverage, it is required to notify the named insured: no more than 30 days before the policy expires at least 90 days before the policy expires no more than 15 days before the policy expires at least 20 days before the policy expires
at least 20 days before the policy expires
Eliza's car is insured with a personal auto policy that includes liability, collision, and other-than-collision coverages. She buys a pickup truck. What coverage, if any, will the PAP provide for the truck? automatic liability coverage if she reports the newly acquired vehicle to the insurer within 14 days. automatic liability coverage for the remainder of the policy period none because the newly acquired vehicle is a truck automatic collision coverage if she reports the newly acquired vehicle to the insurer within 30 days
automatic liability coverage if she reports the newly acquired vehicle to the insurer within 14 days. Because the truck is an additional vehicle, it has automatic liability coverage immediately. Eliza must notify the insurer within 14 days to add the truck to her policy.
Mrs. Innes broke her arm when the car she was driving slid on ice and smashed into a tree after being rear-ended. What definition in the personal auto policy is used to describe her broken arm? bodily injury property damage collision personal injury
bodily injury
The personal auto policy (PAP) defines many terms used in the policy, such as "your covered auto." Which of the following autos is NOT included in the meaning of that term? vehicles shown in the declarations newly acquired autos borrowed autos temporary substitute autos
borrowed autos
Which is least likely to be considered a "covered auto" in a personal auto policy (PAP)? newly acquired passenger auto commercial tractor-trailer combination temporary substitute passenger auto owned private trailer
commercial tractor-trailer combination The PAP provides only limited coverage for trucks with a GVW of 10,000 pounds or more. These types of vehicles should be insured on a commercial automobile policy if they are principally used to carry or deliver goods as part of a commercial operation.
Which of the following refers to state laws that require a motorist to have proof of financial responsibility as a condition of registering the auto or complying with mandatory state inspections? subrogation laws self-appraisal laws no-fault insurance laws compulsory insurance laws
compulsory insurance laws
After a serious accident, Melanie's insurance company refuses to pay to have her auto repaired because the cost of repairs equal 90 percent of the vehicle's current market value. The insurer considers Melanie's car to be a(n): general average actual total loss constructive total loss particular average
constructive total loss Typically, if the estimated cost of repairs is 75 to 80 percent or more of the vehicle's actual cash value, the auto is considered to be a constructive total loss.
Which is NOT one of the three major parts of a personal auto policy (PAP)? applicable endorsements definitions declarations page personal auto coverage form
definitions Although the PAP definitions are important to the policy, they are not one of its three major parts.
The liability section of the personal auto policy (PAP) imposes two duties on the insurer: the duty to indemnify (or pay for covered claims) and the duty to defend. Which duty is said to be the broader or greater duty? duty to defend, which can apply even when coverage is unclear duty to indemnify, since an accident can result in a high severity loss both duties are equal in scope duty to indemnify, since most cases do not involve litigation
duty to defend, which can apply even when coverage is unclear
Morgan Transportation is in the business of transporting cargo by truck. It enters into contracts with other businesses to move their cargo. Which of the following terms most accurately describes Morgan Transportation? private carrier for-hire carrier trucker commercial motor vehicle
for-hire carrier
Which of the following is NOT an exclusion under Part B - Medical Payments Coverage on the PAP? funeral expenses public or livery conveyance racing war
funeral expenses
Sandy takes her car to an auto dealer to have the oil changed. After changing the oil, the mechanic fails to tighten the lug nut to the oil pan. By the time Sandy arrives home with the car, the oil has leaked out and the engine is damaged. Which coverage of the dealer's garage policy will cover that damage to Sandy's engine? garage operations - other than covered autos garage operations - covered autos auto liability comprehensive
garage operations - other than covered autos
In 2013, the Insurance Services Office (ISO) introduced the Auto Dealers form as a replacement to the: business auto policy commercial general liability policy auto liability section of the businessowners policy garage policy
garage policy
Ibey Motors sells used cars. It also repairs cars for its customers. What type of insurance coverage does Ibey Motors need to provide to cover legal liability for vehicles in its care, custody, and control? business auto liability garage liability garagekeepers liability general liability
garagekeepers liability
Underinsured motorists (UIM) coverage protects an insured in an accident caused by a motorist who: has no auto liability insurance is not legally responsible for causing the accident is driving a rental car has coverage limits that are lower than the insured's UM/UIM limits
has coverage limits that are lower than the insured's UM/UIM limits UIM coverage provides protection for the insured's bodily injury when an accident is caused by a motorist whose liability insurance limits are lower than the insured's UM/UIM limits.
Who usually determines which party is legally responsible for an auto accident? insurers judges police juries.
insurers A court with a judge, jury, or both sometimes determines legal liability, but usually the insurer makes this determination based on its investigation of the accident.
The most important coverage in the personal auto policy is the: collision coverage because it protects your car liability coverage because liability losses often involve large amounts of money medical payments coverage because it provides some protection against your own injuries uninsured motorists coverage because almost every accident involves an uninsured motorist
liability coverage because liability losses often involve large amounts of money The PAP's liability coverage is the policy's most important coverage because without it, an insured's legal liability could result in financial ruin.
Mrs. Ogden submitted a claim under her personal auto policy for injuries she sustained in an accident. The insurer made payment, it said, despite the fault of the driver. Under what coverage did the insurer make payment for Mrs. Ogden's injuries? liability uninsured motorists medical payments underinsured motorists
medical payments
What endorsement to the personal auto policy (PAP) would extend coverage to a dune buggy and a golf cart owned by the insured? extended non-owned coverage endorsement furnished or available for regular use endorsement joint ownership coverage miscellaneous type vehicle endorsement
miscellaneous type vehicle endorsement
Spike, the eldest son in the Smith family, has been arrested several times for driving while intoxicated. Other members of the Smith family have clean driving records and present a desirable risk for auto insurance. What provision under the personal auto policy (PAP) may be used to insure all drivers in the family except Spike? personal injury protection named driver exclusion extended non-owned coverage joint ownership coverage
named driver exclusion
Darrel's car is insured by a personal auto policy that includes liability, collision, and other-than-collision coverages. He buys a pickup truck with a 12,000-pound gross vehicle weight. The PAP will provide: no automatic coverage for the pickup because of its high weight rating automatic liability coverage on the pickup if he reports it to the insurer within 14 days automatic liability coverage on the pickup for the remainder of the policy period automatic collision coverage on the pickup if he reports it to the insurer within four days
no automatic coverage for the pickup because of its high weight rating The PAP does not provide automatic coverage for trucks with a gross vehicle weight of 10,000 pounds or more.
Mr. and Mrs. Ferreira were injured when their car was rear-ended by a drunk driver. Before they can sue the at-fault driver to recover damages for their injuries, they first must submit their injury claim to their own auto insurer for payment. What type of state law makes this requirement? no-fault insurance laws personal injury protection laws compulsory insurance laws financial responsibility laws
no-fault insurance laws
Susan is in a collision with another motorist and files a collision claim with her auto insurer. The adjuster inspects the damage to her car and writes an estimate that includes replacing the damage with aftermarket parts, which are also known as: OEM parts non-OEM parts salvage parts black market parts
non-OEM parts
Neal solicits travelers arriving at the airport to offer them transportation in his sedan to local destinations. He is involved in an auto accident that injures two passengers. The medical payments coverage of Neal's personal auto policy will: not cover the passengers' medical expenses because the use of the car as a public conveyance or livery service is excluded from coverage not cover the passengers' medical expense unless Neal is at fault cover the passengers' medical expenses subject to the policy limits cover the passengers' medical expenses only if the accident is not Neal's fault
not cover the passengers' medical expenses because the use of the car as a public conveyance or livery service is excluded from coverage The PAP excludes medical payments coverage for use of an auto as a public conveyance or livery service.
Phoebe rents her home. She loses control of her car on the icy driveway and crashes into the garage door. It will cost $1,000 to repair or replace the door. The property damage liability coverage of Phoebe's personal auto policy will: not pay for the damage because the car was in Phoebe's care, custody, and control pay for the damage to Phoebe's car but not for the damage to the garage pay for the damage not pay for the damage because she does not own the home
pay for the damage Although the PAP does not cover liability for damage to others' property that the insured possesses, it does cover such property when the insured rents a residence or private garage.
Waldo's 20-year-old truck is damaged in an auto collision. The insurer declares it to be a constructive total loss. Therefore, the insurer will NOT: pay to have the auto repaired sell the damaged vehicle as salvage pay the owner the vehicle's actual cash value plus tax minus the deductible take possession of the damaged vehicle
pay to have the auto repaired A constructive total loss exceeds the market value of the vehicle, so the insurer will pay to replace it rather than pay to have it fixed.
In states where no-fault auto insurance is available, the personal auto policy (PAP) can be modified to provide first-party benefits for medical expenses, loss of income, funeral expenses, and similar expenses without regard to fault through the: medical payments provision compulsory benefits provision personal injury protection endorsement joint ownership coverage endorsement
personal injury protection endorsement
Derek takes his car to an auto dealership that loans him a car while his own is being repaired. Derek checks his personal auto policy to see what coverages apply to temporary substitute autos. He learns that a temporary substitute is NOT considered a covered auto for purposes of: physical damage (collision and other-than-collision) coverage liability coverage medical payments coverage uninsured motorists coverage
physical damage (collision and other-than-collision) coverage
A company that only provides truck transportation for its own cargo is known as what type of carrier? common carrier private carrier for-hire carrier trucker
private carrier
The complete personal auto policy combines coverage for collision, fire, accidental injury and death property and liability insurance collision, accidental injury and death property, fire, and collision insurance
property and liability insurance The ISO personal auto policy combines property and liability insurance in a single policy to protect families and individuals. Property insurance protects the vehicle from loss due to fire or collision. Liability insurance protects the owner or operator if the vehicle is involved in an accident that results in injury or death.
The purpose of uninsured motorists coverage is to: protect uninsured drivers from claims for bodily injury protect uninsured drivers from claims for damage to their own autos protect insureds from drivers with inadequate limits of auto liability insurance protect insureds from drivers who have no auto liability insurance
protect insureds from drivers who have no auto liability insurance Uninsured motorists coverage protects insureds from financially irresponsible drivers who do not have auto liability insurance or other financial resources to compensate those they injure by their negligence in an auto accident.
In the event of a hit-and-run auto accident, which of the following is the insured required to do to qualify for collision coverage? pay a hit-and-run fee file an uninsured motorists claim report the hit-and-run accident to the police identify the driver of the other car
report the hit-and-run accident to the police
Which document do applicants for auto insurance use to indicate their state of residency or that their vehicle is principally garaged in that state? utility bill residency statement bank statement pay stub
residency statement
A covered auto listed in the personal auto policy's declarations page must be owned by the named insured, or the insured must have leased it for at least one month. six months. two months. three months.
six months. The vehicle listed in the PAP's declarations page as a covered auto must be owned by the named insured (or leased by the named insured for at least six months).
Tim doesn't need glass breakage coverage for a motorized, self-propelled camper he uses in his business because the windows are made of plastic. What type of coverage might be more appropriate for him? comprehensive coverage specified causes of loss coverage collision coverage towing and labor coverage
specified causes of loss coverage
Trudy is driving her car when it is struck in the rear by Harry. Trudy's insurer pays for the damage to her car, but then files a claim against Harry to recover the amount it paid to Trudy. What provision in Trudy's personal auto policy gives the insurer the right to pursue Harry to recover this amount? appraisal no benefit to bailee subrogation other insurance
subrogation
Muller's Floral Shop uses vans to deliver flowers and is insured with a business auto policy. It wants auto liability coverage on all autos, but medical payments, UM/ UIM, and physical damage coverage only on owned autos. Which symbols does Muller's insurance agent recommend for these coverages? symbol 2 for all vehicles and coverages symbol 7 for liability on owned vehicles; symbol 4 for medical payments, UM/UIM, and physical damage coverage symbol 1 for liability coverage on any auto; symbol 2 for medical payments, UM/UIM, and physical damage coverage on owned autos symbol 7 for liability, medical payments, UM/UIM, and physical damage coverages on all owned autos
symbol 1 for liability coverage on any auto; symbol 2 for medical payments, UM/UIM, and physical damage coverage on owned autos
Which covered auto symbol is used to designate owned autos on the business auto policy? symbol 1 symbol 2 symbol 3 symbol 4
symbol 2
Hector has his car regularly serviced by the dealership that sold it to him. While his car is being serviced, a mechanic accidentally drops a heavy wrench on the car's hood and dents it. Whose coverage will apply in this case? Hector's collision coverage the dealer's general liability coverage the dealer's auto liability coverage the dealer's garagekeepers coverage
the dealer's garagekeepers coverage
Medical payments coverage pays for necessary medical and funeral services so long as the expenses were incurred within how many years from the accident date? one year two years three years four years
three years
When the front fenders of Bobbie's coupe were damaged in an auto accident, his insurer arranged to replace them with non-original equipment manufacturer (non-OEM) parts. Why does the insurer use non-OEM parts? to ensure that the replacement parts are the best available to help minimize the cost of repairs and the cost of insurance to guarantee that the replacement parts are of like kind and quality to eliminate the deductible
to help minimize the cost of repairs and the cost of insurance Insurers' use of aftermarket parts from non-original equipment manufacturers helps minimize the cost of repairs and the cost of insurance.
What is the purpose of no-fault auto insurance? to make it easier for accident victims to collect from at-fault motorists to lower insurance costs by reducing or eliminating litigation to make motorists responsible for their own injuries to eliminate the need for uninsured motorists coverage
to lower insurance costs by reducing or eliminating litigation No-fault auto insurance is intended to reduce the cost of auto liability coverage and the cost of litigating auto accident claims.
With the personal auto policy (PAP), which of the following does the towing and labor costs endorsement (PP 03 03) cover? labor charges for repairs made after a tow the cost of repair work performed at a garage to which the car is towed towing and labor charges incurred where a covered auto is disabled towing and labor charges as well as repairs following the tow
towing and labor charges incurred where a covered auto is disabled
Allied Motor Transport Co. and Brothers Cartage Co. agree to use each other's trailers while transporting cargo. While using one of Brothers' trailers, Alliance has an accident that damages the trailer. What coverage does Alliance need to pay for the damage? business auto policy truckers policy trailer interchange coverage inland marine endorsement
trailer interchange coverage
Which of the following is covered by a business auto policy's physical damage provisions? transportation expenses after the theft of an auto covered for comprehensive causes of loss expenses to repair damage to a covered auto due to wear and tear expenses related to a tire that blew out due to excessive heat or speed damage to a car while it competed in a race to benefit a charity
transportation expenses after the theft of an auto covered for comprehensive causes of loss
Danny is driving several children to school in his minivan when it is struck by a dump truck. Two children are killed. An investigation concludes that Danny is at fault. His personal auto policy (PAP) has a $50,000 medical payments limit. How much will the insurer pay for the two funerals? up to $100,000 nothing the total cost up to $50,000
up to $100,000 Because the medical payment limit applies for each person injured in a single accident, the insurer will pay reasonable expenses up to $50,000 for each of the two funerals.
The driver's door on Misty's roadster was damaged in an auto accident. Her insurer wants to have the damage repaired with non-original equipment manufacturer parts. The state law is most likely to require the insurer to do all of the following EXCEPT: ensure that the parts identity their manufacturer waive the deductible get Misty's consent to use non-OEM parts disclose the use of non-OEM parts to Misty
waive the deductible Many states require that OEM parts carry permanent identification and that the insurer disclose and get the consumer's consent to the use of non-OEM parts.
