unit 8 - personal auto insurance

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?

$10,000

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

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?

$25,000 100,000 + 300,000 = 400,000 100 / 400 = 0.25 100,000 (loss) x 0.25 = $25,000

Julia purchases a new car for her daughter. How many days does she have to add it to her policy?

14 days

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?

3 years

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 nonowned automobile

All of the following vehicles are eligible for coverage under the PAP EXCEPT

A pickup with a gross vehicle weight of 15,000 pounds

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 temporary substitute automobile

A personal auto policy provides coverage for all of the following drivers of an insured car EXCEPT

A thief who steals the car

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

Under an auto policy, Other than Collision coverage would apply to which of the following situations?

All of the car's tires are stolen

Matt has just been nonrenewed by his auto insurance company because he had 3 speeding tickets and 2 at-fault accidents in the last 9 months. Matt will most likely need to obtain insurance from

An assigned risk plan

Jeffrey bought a car yesterday for his daughter to drive to school and her job. Under Jeffrey's automobile policy, this car is considered

An owned automobile

The covered auto is defined in the policy as all of the following EXCEPT

Any additional auto acquired in the past 30 days

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

Arbitration

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?

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

Which of the following is considered an uninsured/underinsured motor vehicle?

Car insured for less than the limits required by the state

Automobile comprehensive coverage insures all of the following perils EXCEPT

Collision

Depending on the circumstances, a passenger injured in an automobile accident may be able to recover under all of the following coverages EXCEPT

Collision

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

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

Coverage starts 48 hours after a car is damaged by an Other than Collision loss

In automobile insurance, the term supplementary payments refers to payments

Covering reasonable expenses incurred at the insurer's request and other specified expenses that are not subject to the policy limit

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

All states have financial responsibility laws that require each driver to prove that he can pay for bodily injury or property damage liability losses arising out of auto accidents. These are also known as

Financial responsibility laws

Which of the following damages is covered under Part D--Coverage for Damage to the Insured's Auto?

Flood

All of the following are excluded under collision or Other than Collision EXCEPT

Flood damage

Mary was involved in an accident with a hit-and-run driver. The car was damaged. Mary is required to comply with all of the following duties EXCEPT

Following the hit-and-run driver to get a valid identification

The personal 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

Freezing

Which one of the following would NOT be paid as supplementary payments under Part A of the personal auto policy?

Funeral expenses for the insured

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

Jim borrows a company van to take his son to college. As the trip takes more than 10 hours, he would like to share the drive with Julia, his wife. What endorsement should Jim add to the company commercial auto policy to make sure he has the proper coverage?

Individual named insured

Part A of the personal auto policy would apply in which of the following situations?

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

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, Joe is hit from behind by a car driven by Sam. Joe is injured and taken to the hospital where he 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 Joe for his injuries?

Joe's uninsured motorist bodily injury coverage

Jonathan and Mary have 2 sons. Steve lives at home and the other son, Stan, lives in an apartment across town. Jonathan wants to buy a car for Stan so he can get a job after his college classes. Jonathan titles the car in both his name and Stan's name and wants to add the car to his automobile policy. Which endorsement will provide this coverage?

Joint ownership coverage

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

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?

Loss involves property damage to insured's auto

Jane insures her car with ABC Insurers. Which of the following individuals 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. Maggie dies as a result of her injuries. What coverage will reimburse Jane for Maggie's funeral expenses?

Medical payments coverage

In which of the following areas would PAP coverage typically NOT extend?

Mexico

An auto policy would provide coverage for an auto driven in all of the following places EXCEPT

Mexico City, Mexico

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

Miscellaneous type vehicle endorsement

All of the following vehicles can be insured under an unendorsed personal auto policy EXCEPT

Motorcycles

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

Monica uses her car for her skin-care business. One night, she drives the car to meet a friend at a restaurant. While driving home, Monica loses control of the car, hits a parked car, and rolls the car over. Monica is severely injured and taken to the hospital. Will medical payments coverage reimburse Monica for her medical bills?

No, there is no coverage for injuries while occupying a vehicle used for the insured's business

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

Other Than Collision

If a vehicle collides with a boulder that came tumbling down the side of a mountain, what coverage would pay for the damage?

Other than Collision

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

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?

Other than Collision

Comprehensive coverage pays for all of the following damages EXCEPT

Overturning of the auto

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

Medical Payments Coverage is Part B in the personal automobile policy. All of the following statements about medical payments coverage are correct EXCEPT

Part B covers reasonable expenses for services incurred within 5 years of the date of injury

The personal auto policy coverage applies to losses, accidents, or occurrences that take place during the policy period in all the following locations EXCEPT

Phillipsburg, St. Martin

What is a no-stacking rule?

Prevents the insured or injured person from collecting medical payments from more than one policy or coverage, such as uninsured motorist

Richard and his wife own 2 family cars. In addition, Richard is given a company car to makes sales calls. He occasionally uses the company car for personal use and is concerned that he may not have sufficient company coverage. Which of the following is the best advice his agent can give him?

Richard can add the extended nonowned coverage for named individual endorsement to his policy

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

Towing and labor coverage covers all the following EXCEPT

The cost of a fan belt replaced at the scene of a breakdown

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?

The driver's automobile policy under the property damage liability provisions

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?

The front windshield is shattered

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?

The insurance company will cover the auto repairs and injuries

Which of the following statements it TRUE regarding the termination provision?

The insurer must provide written notice to the insured for policy cancellation or nonrenewal

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

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

The occupant of the car struck by the insured

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

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

All of the following statements regarding Part D--Coverage for damage to your auto are correct EXCEPT

This coverage covers all personal property in the vehicle

Personal auto liability insurance provides coverage in all of the following situations EXCEPT

When the insured uses the auto as a taxi