Auto Insurance (BAP)

Alvin's garage policy, which includes comprehensive coverage on all owned vehicles in his inventory, has a physical damage coverage limit of only $200,000. However, the used cars on his lot have a total insurable value of $500,000. Alvin thought it impossible that his entire inventory could be completely destroyed in a single event until a flood eliminated the inventory. How much will Alvin recover from his insurer? $500,000 $200,000 Nothing, because he failed to comply with the policy's insurance-to-value (coinsurance) requirement. $100,000 after application of a coinsurance penalty.

$200,000

Fox Fiat wants to be sure its mechanics are covered when they are road testing a customer's auto to diagnose a problem or ensure that it has been properly repaired. Therefore, Fox Fiat should be sure its garage policy includes liability coverage with Symbol 21 or 26. 27. 28. 29.

29.

Howe Honda wants to be sure its garage policy includes garagekeepers coverage so it is protected for physical damage to customers' cars in its custody. To verify that this coverage is in place, Howe should check the garage policy declarations to see if which symbol applies to the policy's garagekeepers coverage? 28 30 31 29

30

Mighty Manufacturing is the named insured in a business auto policy (BAP) with Amazing Insurance. The BAP includes comprehensive coverage, but not collision coverage, on all owned vehicles. Subject to a deductible, Amazing will pay for the damage to Mighty's vehicle in all the following situations EXCEPT: A deer runs into Mighty's pickup truck while it is being driven on a country road. A distracted employee drives Mighty's truck into a building wall.

A distracted employee drives Mighty's truck into a building wall.

Jonah suffered a whiplash injury when Nina's school bus rear-ended the company car he was driving. Jonah was permitted to use this car for personal use, and he was not on duty at the time of the accident. He consulted his own doctor, who referred him to a chiropractor, and he submitted the bills to Apache Insurance company, which writes his employer's BAP. The BAP includes medical payments coverage. Apache now wants its own insurer to examine Jonah and render a second opinion. Who should pay for this second opinion? Apache Insurance Company Jonah Jonah's employer Nina

Apache Insurance Company

Beau owns a flatbed trailer that is insured under his motor carrier policy. However, the trailer is not in Beau's custody because he lent it to Vinson who also has a motor carrier policy. The trailer strikes a parked car while being pulled by one of Vinson's power units. In this situation, Beau is an insured under Vinson's policy because Vinson is a permissive user of the trailer. Beau is an insured under Vinson's policy even though Beau is not a named insured or a permissive user of the trailer. Neither Beau nor Vinson is an insured under either party's policy. Beau automatically becomes a named insured under Vinson's policy.

Beau is an insured under Vinson's policy even though Beau is not a named insured or a permissive user of the trailer.

If a physical damage claim is made, which one of the following losses would be covered under a business auto policy (BAP) that includes comprehensive and collision coverage? Rupert, an employee of a civilian defense contractor, takes his vehicle to Afghanistan where it is damaged by an improvised explosive device. Bernice's convertible is stolen by a convicted felon who is out on parole. Doreen's sports car is in a collision during an organized race held in Ohio. Carmen's sports car has 200,000 miles on it and the engine will not turn over any more.

Bernice's convertible is stolen by a convicted felon who is out on parole.

What does the Motor Carrier Act of 1980 require some motor carriers to do? Have their vehicles inspected every six months Apply for an MCS-90 endorsement Maintain adequate limits of physical damage coverage Carry liability insurance at limits that vary depending on the property they transport

Carry liability insurance at limits that vary depending on the property they transport

Byrd Company reimburses its employees who use their own cars on company business on a mileage basis. However, employees who often drive on company business are concerned about the possibility of being sued if they are involved in an accident. Byrd is weighing the advantages and disadvantages of adding the "employees as insureds" endorsement to its business auto policy. Which one of the following is not an advantage? Better cooperation likely between the employee's insurer and Byrd's insurer in settling an accident claim Reduced likelihood of subrogation by Byrd's insurer against an employee who causes an accident Change in Byrd's business auto policy premium Effect on employer-employee relations

Change in Byrd's business auto policy premium

Apache Insurance Company insures Compton Trucking under a motor carrier policy with an MCS-90 endorsement. Because of the endorsement, Apache was recently required to pay a claim that the policy would not otherwise cover. What happens next? Apache will subrogate against Compton. Compton must reimburse Apache. Apache will cancel Compton's policy. Compton's premium will increase when the policy is renewed.

Compton must reimburse Apache.

Geneva Trucking Company is not sure whether it is subject to the Motor Carrier Act of 1980 because Geneva does not know whether the cargo it transports is considered hazardous. Where can Geneva get a list of what materials are considered hazardous? Department of Transportation (DOT) Occupational Safety and Health Administration (OSHA) National Safety Council (NSC) International Risk Management Institute (IRMI)

Department of Transportation (DOT)

Nelson has a company car. Since he does not own another vehicle, he has no auto insurance in his own name that might protect him when he drives anyone else's car. What is an endorsement to Nelson's business auto policy that would give him this protection? Employees as insureds Hired autos specified as covered autos you own Drive other car-broadened coverage for named individuals Individual named insured

Drive other car-broadened coverage for named individuals

Elsa ran into a legally parked car while she was driving her own car to the store to pick up some supplies for Wilson Company, her employer. Wilson's Business Auto Policy includes liability coverage on nonowned autos. Elsa also has her own personal auto policy. Who should pay for the damage to the parked car? Elsa The car owner's insurer Elsa's insurer Wilson's insurer

Elsa's insurer

Jim was a driver for the Abstract Concrete Company when he was involved in a traffic accident. Because he was injured while driving his employer's cement truck, Jim is unable to perform his normal household and marital duties, so Jim's wife Cora sues Abstract for damages. What exclusion will the insurer cite in denying coverage for this claim under Abstract's business auto policy (BAP)? Handling of property exclusion Workers compensation exclusion Fellow employee exclusion Employee indemnification and employers liability exclusion

Employee indemnification and employers liability exclusion

Wheeler Company's tank trucks transport liquefied natural gas to homes and businesses within a single state. What does the Motor Carrier Act of 1980 require Wheeler to do? Apply for a permit to transport hazardous materials. Add an exclusionary endorsement to its policy. Furnish evidence of financial responsibility of at least a specified minimum amount. Waive its rights of subrogation while transporting hazardous materials.

Furnish evidence of financial responsibility of at least a specified minimum amount.

Roxanne had only a few miles on her new car when it was broadsided by a negligent driver. She took her car to the dealer for repairs. While waiting for parts, the car dealer stored Roxanne's car in a warehouse. While it was there, a fire of undetermined origin burned down the warehouse and destroyed the car. Which coverage, if any, of the dealer's auto dealers policy is most likely to respond to this incident? Physical damage None of these coverages is likely to apply Auto liability Garagekeepers

Garagekeepers

Which one of the coverages in Mason's garage policy would most likely respond to a claim for damage to a customer's car while it was in his shop for repairs? None, because the customer's own policy applies. Physical damage coverage Liability coverage Garagekeepers coverage

Garagekeepers coverage

An auto dealer's garage policy includes coverage for which of the following exposures? Auto liability and physical damage exposures Auto liability, general liability, and commercial property exposures Property and general liability exposures General liability and auto exposures

General liability and auto exposures

Trucking Company is the named insured under a motor carrier policy. Which one of the following parties is not an insured under this policy's liability coverage? Georgia, whose peaches are being transported on one of Trucking Company's trucks Aileen, who is driving one of Trucking Company's vehicles with the company's permission Trucking Company Stanley, the owner of a borrowed semitrailer being pulled by one of Trucking Company's semi-tractors

Georgia, whose peaches are being transported on one of Trucking Company's trucks

Henson's Tree Service business auto policy includes a mobile equipment endorsement that lists his truck with the attached "cherry picker," an elevated work platform. An employees is raising the bucket to trim a tree next to a customer's house when he accidentally slams the bucket into the house, damaging the siding. The resulting property damage liability claim is covered by Henson's workers compensation and employers liability (WC&EL) policy. Henson's commercial general liability (CGL) policy. the homeowner's homeowners policy (HO) under the vehicle damage peril. Henson's business auto policy (BAP).

Henson's commercial general liability (CGL) policy.

Abigail Clark, the owner of Alphabet Business Company (ABC), is the named insured in a business auto policy that covers her personally owned sedan. What endorsement should be attached to her policy? Employees as insureds endorsement Individual named insured endorsement Drive-other-car broadened coverage for named individuals endorsement Designated insured endorsement

Individual named insured endorsement

An MCS-90 endorsement is attached to the motor carrier policy on Elva's fleet of commercial trucks. What is the purpose of this endorsement? Insurance Services Office, Inc. (ISO), requires this endorsement to update the policy until the entire form can be revised. It amends the policy to comply with the requirements of the Motor Carrier Act of 1980. It is used to designate additional insureds to whom the policy's liability coverage applies. It affirms that the necessary permits have been filed with states where the carrier operates.

It amends the policy to comply with the requirements of the Motor Carrier Act of 1980.

Abstract Concrete Company carries broad business auto coverage on all owned vehicles, including the concrete mixer trucks with a narrow cab that has room for only the driver. A consultant recommends they drop the auto medical payments coverage on these mixer trucks. What is the likely basis for this recommendation? Auto medical payments coverage duplicates the policy's uninsured motorists coverage. Auto medical payments coverage duplicates the policy's bodily injury liability coverage. The consultant fails to recognize the importance of auto medical payments coverage. It is highly unlikely that Abstract will have an auto medical payments claim that would be covered.

It is highly unlikely that Abstract will have an auto medical payments claim that would be covered.

Earline's business auto policy (BAP) includes comprehensive and collision coverage on owned autos. Her high-mileage pickup truck struck debris on the road that ruptured the engine's oil pan, and the resulting sudden loss of oil ruined the engine. Earline's insurer arranges to have a new engine installed, and the pickup will now be worth much more than it was before. What will the insurer pay? It will pay for the new engine and its installation after making an adjustment for diminution. It will pay nothing because striking road debris is not a covered peril. It will pay for the new engine and its installation after making an adjustment for betterment. It will pay the full cost of the new engine and its installation.

It will pay for the new engine and its installation after making an adjustment for betterment.

Because his own trailer had a flat tire, Johnnie borrowed Nadia's trailer for use in his landscaping business. Both Johnnie and Nadia have business auto policies that include liability coverage. While Johnnie is turning a corner, the trailer sideswipes a parked car. Who should pay for the damage to the parked car? Johnnie Nadia Johnnie's insurer Nadia's insurer

Johnnie's insurer

When she received the notice that her company was being sued by a pedestrian who had allegedly been injured by one of the vehicles in her company's fleet, Justine set the notice aside. She only remembered it while she was clearing her desk a month later, at which time she submitted a copy to the insurer who wrote her business auto policy. What duty, if any, did Justine violate? Because she promptly submitted the notice as soon as she found it, Justine did not violate any duties. Justine violated her duty to immediately send the notice to the insurer. By simply forwarding the notice, Justine failed to authorize the insurer to obtain pertinent information. Justine was too busy to do her job properly.

Justine violated her duty to immediately send the notice to the insurer.

Kelly Company wants physical damage insurance that includes coverage on its 20 flat-bed trailers against loss by collision and other perils. However, because these trailers have no glass, Kelly's fleet manager does not want to pay a premium for coverage that includes glass breakage. How should the physical damage coverage under Kelly's business auto policy (BAP) be arranged? Kelly should purchase collision and comprehensive coverage. Kelly should cover the trailers for collision and specified causes of loss. Kelly should purchase "specified causes of loss" coverage, which includes coverage for damage caused by collision and a few other identified perils. Kelly should purchase only collision coverage.

Kelly should cover the trailers for collision and specified causes of loss.

A local newspaper's investigative reporters publish an article stating that Knight Trucking Company violates the Motor Carrier Act (MCA) of 1980 because Knight transports hazardous materials without meeting MCA requirements. Who is responsible for determining whether the materials Knight transports are hazardous? State police State Department of Transportation Investigative reporters Knight Trucking Company

Knight Trucking Company

Norberto's four vans were acquired under a long-term lease arrangement that requires his business to insure them and also to include the lessor as an insured. The best way for Norberto to accomplish this is to purchase a business auto policy with what endorsement? Loss payee Drive other car Lessor-additional insured and loss payee Hired autos specified as covered autos you own

Lessor-additional insured and loss payee

Because his own pickup truck had a flat tire, Austin borrowed Luann's truck to tow Austin's trailer. Both Austin and Luann have business auto policies that include liability coverage. While Austin is turning a corner in Luann's pickup, Austin's trailer sideswipes a parked car. Who should pay for the damage to the parked car? Luann Luann's insurer Austin's insurer Austin

Luann's insurer

In which of the following situations is the uninsured motorists coverage under a business auto policy most likely to apply? Corina is injured when the dump truck she is driving is involved in a one-vehicle accident. Marisol is injured when an uninsured car runs a red light and collides with her truck. Horace is injured while riding to a business appointment in a ride sharing vehicle that has no applicable insurance. Marlin is injured when his truck runs a red light and collides with an uninsured car.

Marisol is injured when an uninsured car runs a red light and collides with her truck.

To which of the following incidents would the garage liability insuring agreement of Kim Kia's garage policy apply? Patty, an employee, is injured in an accident while test-driving a new car. Brittney, a customer, is injured in an accident while test-driving a new car. Marla, a customer, trips over a rug in the showroom and is injured. Crystal alleges that Kim Kia failed to honor a new car warranty.

Marla, a customer, trips over a rug in the showroom and is injured.

Which of the following would not fall within the definition of bodily injury for purposes of coverage by the business auto policy (BAP)? Disease Mental trauma Illness Death

Mental trauma

In which of the following situations is the underinsured motorists coverage under a business auto policy most likely to apply? Brianna is injured when an uninsured car runs a red light and collides with her truck. Coy is injured while riding to a business appointment in a ride sharing vehicle that has no applicable insurance. Mickey is seriously injured when his truck is struck by a car whose driver has the minimum amount of liability insurance required by law. Laverne is injured when the dump truck she is driving is involved in a one-vehicle accident.

Mickey is seriously injured when his truck is struck by a car whose driver has the minimum amount of liability insurance required by law.

As defined in the business auto policy (BAP), the term "auto" does not include vehicles that fall under what definition? Toys Trailers Trucks Mobile equipment

Mobile equipment

Rocky sometimes transports hazardous materials by truck. Which of the following requires him to carry certain minimum limits of insurance coverage for doing so? Motor Carrier Act of 1980 Motor Carrier Policies of Insurance for Public Liability Act Occupational Safety and Health Act (OSHA) Department of Transportation Act of 1980

Motor Carrier Act of 1980

Which type of insurance policy has been suitable for either private motor carriers or for-hire motor carriers? Trailer interchange policy Motor carrier policy Business auto policy Truckers policy

Motor carrier policy

Petra's new car dealership is insured under a garage coverage form. Which one of the following situations would give rise to a liability claim against Petra that is not covered by this policy? Petra's mechanic is injured in an accident while test-driving a customer's car. A customer slips on a wet floor in the new car showroom and is injured. An accident occurs because a customer's brakes fail after Petra's mechanic repaired them. Workmen are replacing a showroom windowpane when they accidently drop it and injure a customer.

Petra's mechanic is injured in an accident while test-driving a customer's car.

Sally's new car was broadsided by a reckless driver. She took the car to the dealer who sold it to her so it could be repaired. While waiting for parts, the dealer stored Sally's car in a warehouse. While it was there, the fire of undetermined origin destroyed the car. The dealer's auto dealers policy declarations indicate that comprehensive coverage applies and that garagekeepers coverage applies as primary insurance. Which of the following is not an insured under the dealer's garagekeepers policy? Sally Dealer employees Dealer Dealer's stockholders

Sally

Sly's new car was broadsided by a careless driver. He took his car to the dealer for repairs. While waiting for parts, the car dealer stored Sly's car in a warehouse. While it was there, lightning struck the warehouse and started a fire that destroyed the car. Sly's car is insured by a personal auto policy (PAP) that includes other-than-collision (comprehensive) coverage. The dealer's auto dealers policy declarations indicate that comprehensive coverage applies and that garagekeepers coverage applies as excess insurance. How will the insurer that issued the dealer's auto dealers policy most likely to respond to this incident? The insurer will invoke the policy's appraisal condition to determine whether the dealer's negligence was partially responsible for this loss. The insurer will deny coverage because the dealer is not legally liable for a loss caused by lightning. Sly's PAP will be primary, and the auto dealers policy will provide excess coverage. The insurer will provide primary coverage and buy Sly another car.

Sly's PAP will be primary, and the auto dealers policy will provide excess coverage.

The declarations of its motor carrier policy indicate that Ingram Trucking Company is the named insured. Which one of the following parties is not considered an insured for liability coverage under this policy? Stacie, whose chickens are being transported on one of Ingram's trucks Lon, the owner of a borrowed semitrailer being pulled by one of Ingram's semi tractors Ingram Trucking Company Crystal, who is driving one of Ingram's vehicles with the company's permission

Stacie, whose chickens are being transported on one of Ingram's trucks

MegaBucks Company employees Ted and Clinton are driving to a business meeting in a company car that is a covered auto under MegaBucks' business auto policy (BAP). Ted runs a red light and crashes into another vehicle that had a green light. Clinton, who is severely injured in the accident, sues Ted for negligence. According to the fellow employee exclusion in MegaBucks' BAP, because Ted was driving a company car, he is insured against this claim by Clinton. because Clinton was not driving, he is not an insured, and has no grounds to sue. Ted's personal auto policy provides primary coverage for Clinton's injury. Ted has no coverage for bodily injury to Clinton in this situation.

Ted has no coverage for bodily injury to Clinton in this situation.

Casey Furniture Company owns a small fleet of trucks that transport steel office furniture from Casey's factory to retail stores in several states. What, if anything, does the Motor Carrier Act of 1980 (MCA) require Casey to do? Because Casey's vehicles travel interstate, Casey must meet financial responsibility requirements. The MCA does not apply to Casey. Because Casey is transporting hazardous substances, Casey must meet financial responsibility requirements. Casey must have the MCS-90 endorsement added to its auto liability policy.

The MCA does not apply to Casey.

Mauricio drives The Flower Shop's van to deliver fresh flowers to Leila, a regular customer. He trips on steps leading to her porch. The flowerpot he drops makes a big divot in her freshly painted porch floor. How will The Flower Shop's business auto policy (BAP) respond to Leila's property damage liability claim, if at all? The claim is covered because the damage occurred while Mauricio was unloading the vehicle. The claim is covered by the commercial general liability (CGL) insurance policy but not by the BAP. The claim is excluded because the vehicle was not damaged. The claim is excluded because the damage occurred away from the vehicle.

The claim is covered because the damage occurred while Mauricio was unloading the vehicle.

After the fire damaged her own delivery van, Lawanda rented another van to deliver flowers. Her business auto policy (BAP) includes transportation expense coverage. How should the adjuster settle Lawanda's claim for the rental expenses? The insurer will pay the rental expenses subject to a 24-hour deductible. The insurer will pay up to $20 per day subject to a maximum of $600 to cover the rental expenses. The claim is not covered. The insurer will pay the rental expenses subject to a $600 deductible.

The claim is not covered.

For years, Decker Dodge disposed of used motor oil, antifreeze, and other fluids by dumping them on vacant land behind Decker's building. These chemicals have now seeped into neighboring properties' wells, and these land owners are demanding that Decker take corrective action. How should Decker's garage policy respond to this problem? The cleanup costs are covered by the garage liability insuring agreement. The cleanup costs are not covered due to a pollution exclusion. The cleanup costs are covered by the garage operations insuring agreement. The cleanup costs are not covered due to a contractual liability exclusion.

The cleanup costs are not covered due to a pollution exclusion.

Steve's car was undergoing maintenance in the dealer's shop when lightning struck the building and caused it to burn to the ground. Because the dealer has a garage policy that includes liability coverage, physical damage coverage, and garagekeepers coverage with the excess direct coverage option, which statement is true? The dealer's insurer will pay any portion of Steve's loss that his personal auto insurance does not cover. The dealer's insurer will treat this as a property damage liability claim and pay Steve's loss in full. Garagekeepers coverage does not apply since the dealer cannot be held legally responsible for a lightning strike. The dealer's insurer will pay for the loss to Steve's car and other customers' cars, subject to the policy's limit and deductible.

The dealer's insurer will pay any portion of Steve's loss that his personal auto insurance does not cover.

Barbara's car was in the dealer's shop when lightning struck the building and ignited it. Because the dealer has a garage policy that includes liability coverage, physical damage coverage, and garagekeepers coverage with the primary direct coverage option, which statement is correct? The dealer's insurer will pay for the loss to Barbara's car and other customers' cars, subject to the policy's limit and deductible. The dealer's insurer will treat this as a physical damage claim and pay Barbara's loss in full. The dealer's insurer will pay any portion of Barbara's loss that her personal auto insurance does not cover. Garagekeepers coverage does not apply because the dealer cannot be held legally responsible for a lightning strike.

The dealer's insurer will pay for the loss to Barbara's car and other customers' cars, subject to the policy's limit and deductible.

Rocky's new car was damaged in a collision. He took his car to the dealer for repairs. While waiting for parts, the car dealer stored Rocky's car in a warehouse. While it was there, lightning struck the warehouse and started a fire that destroyed the car. Rocky's car is insured by a personal auto policy (PAP) that includes other-than-collision (comprehensive) coverage. The dealer's auto dealers policy declarations indicate that none of the policy's optional garagekeepers coverages applies. How will the adjuster handling the dealer's auto dealers policy most likely to respond to this incident? The insurer will provide primary coverage and buy Rocky a replacement car. The insurer will invoke the policy's appraisal condition to determine whether the dealer's negligence was partially responsible for this loss. The insurer will deny coverage because the dealer is not legally liable for a loss caused by lightning. The insurer will provide excess coverage and pay the deductible under Rocky's PAP.

The insurer will deny coverage because the dealer is not legally liable for a loss caused by lightning.

Bud's car was in the dealer's shop for scheduled service when lightning set fire to the building, which destroyed the car. Because the dealer has a garage policy that includes liability coverage, physical damage coverage, and garagekeepers coverage with the excess direct coverage option, how will the insurer treat this loss? This as a property damage liability claim to be paid in full. Because the dealer did not cause the lightning strike, garagekeepers coverage does not apply. The insurer will not pay for the loss to Bud's car because lightning is not a covered peril. The insurer will pay the excess over any other collectible insurance, without regard to the insured's legal liability.

The insurer will pay the excess over any other collectible insurance, without regard to the insured's legal liability.

Which one of the following pollution liability losses would be covered by a business auto policy? Gasoline leaking from a tank truck that is delivering gasoline to service stations causes a fire. The rusty fuel line between a garbage truck's fuel tank and its engine bursts, leaking 50 gallons of diesel fuel leak onto a residential neighborhood's street. Drums containing medical waste fall off the back of a truck that is transporting them, and a hazmat team is necessary to clean up the mess. Raw sewage leaks from a septic tank service company's wagon that is parked overnight and pollutes a stream.

The rusty fuel line between a garbage truck's fuel tank and its engine bursts, leaking 50 gallons of diesel fuel leak onto a residential neighborhood's street.

Mitch Motor Carrier borrows a trailer from Maude to transport an oversize shipment for a customer and signs an agreement assuming liability for loss to Maude's trailer while Mitch has it. What kind of coverage is available to protect Mitch in this situation? Borrowed equipment coverage under Mitch's commercial general liability (CGL) policy Contractually secured borrowed trailer coverage Trailer liability coverage endorsement Trailer interchange coverage

Trailer interchange coverage

Because Pugh Trucking Company sometimes transports hazardous substances, the Motor Carrier Act of 1980 requires Pugh to carry certain minimum limits of liability insurance. What determines the minimum limits Pugh is required to carry? Types of vehicles (such as tanker, flatbed, enclosed trailer) that Pugh uses Number of vehicles in Pugh's fleet Number of states in which Pugh operates Type of property being transported

Type of property being transported

Cozzie Company has a business auto policy with Insta-Insurer with a $1 million liability limit. Cozzie is sued after one of its employees, while making a business delivery, is involved in a traffic accident in which several people were injured. Insta-Insurer has been defending Cozzie and the employee in this lawsuit. At what point will Insta-Insurer's obligation to defend or settle this suit end? When Cozzie Company hires its own defense attorney. When Insta-Insurer has paid $1 million in judgments or settlements. When Insta-Insurer has spent $1 million in judgments, settlements, and defense costs. When Cozzie Company admits its driver is responsible for the accident.

When Insta-Insurer has paid $1 million in judgments or settlements.

Unless one of two direct coverage options applies, when does the garage policy's garagekeepers coverage provide coverage? When the insured is legally liable for the loss When the loss is caused by an Act of God When the owner of the damaged vehicle has no insurance When the damaged vehicle is in the insured's care, custody, or control at the time of the loss

When the insured is legally liable for the loss

Sloan's business auto policy has a $500,000 limit that applies to the liability coverage. This means that the insurer will not pay more than $500,000 in damages for all claims resulting from a single accident. a single claim. the term of the policy. all covered losses during the policy term.

all claims resulting from a single accident.

The declarations of Elvin's garage policy indicate that symbol 21 applies to liability coverage. This tells us that Elvin has liability coverage for any owned private passenger auto hired autos only any auto any owned auto

any auto

McConnell Paving Company owns a number of motor vehicles, including trucks, cars, and various pieces of mobile equipment. If these items are properly insured, any item of mobile equipment that does not have liability coverage under McConnell's business auto policy (BAP) will have liability coverage under the company's employers liability insurance. commercial general liability (CGL) policy. personal auto policy. contractors equipment floater.

commercial general liability (CGL) policy.

The physical damage coverage of an auto dealers policy can be arranged to cover all the following EXCEPT: autos without a driver hired by the insured. the dealer's interest in autos being held for sale that are financed. autos in the dealer's current inventory. customers' autos.

customers' autos.

A tire blew out when Ronny was driving his company's truck at highway speeds. Ronny then lost control of the vehicle but escaped injury when the vehicle turned over. The truck is covered under the company's business auto policy, which includes comprehensive and collision coverage. Subject to a deductible, the insurer will pay for damage to the truck, except for the tire that blew out. damage to the truck, including the tire that blew out. none of the loss, though Ronny may be able to collect from the auto or tire manufacturer. the tire that blew out, but not the other damage to the truck.

damage to the truck, except for the tire that blew out.

While Roderick was making a delivery, a radiator hose on his delivery van burst and sprayed a mix of antifreeze and rusty water. The spray stained the customer's new concrete driveway. The customer wants Roderick to pay to have the driveway resurfaced. The pollution exclusion in Roderick's business auto policy does not exclude coverage for the damage. excludes coverage for this pollutant that was stored on Roderick's truck. excludes coverage for this accidental discharge of a coolant necessary to the truck's operation. excludes coverage for the damage caused by antifreeze but not for the damage caused by rusty water.

does not exclude coverage for the damage.

While entering a construction site, Dustin's dump truck ran over a boulder that tore a hole in the engine's oil pan and released motor oil that seeped into the sandy soil. The owner of the site wants Dustin to pay to have the oil removed from the ground. The pollution exclusion in Dustin's business auto policy is an absolute pollution exclusion that excludes coverage for any pollutant, including motor oil. excludes coverage for this accidental discharge of a lubricant necessary to the truck's operation. excludes coverage for this pollutant that was stored on Dustin's truck. does not exclude coverage for this damage.

does not exclude coverage for this damage.

Ernie would like to have appropriate insurance coverage on his used car business. He only sells used cars, and he is not loyal to any particular brand. Assuming his insurer still uses the garage coverage form, Ernie is ineligible for coverage under a garage form, so he should buy a business auto coverage form. eligible for coverage under a garage coverage form because he is a nonfranchised dealer. eligible for coverage under a garage coverage form because he is a disenfranchised dealer. ineligible for coverage under a garage coverage form because he is a franchised dealer.

eligible for coverage under a garage coverage form because he is a nonfranchised dealer.

According to the Insurance Services Office, Inc. (ISO), motor carrier policy, a trucker is a person or organization providing transportation by auto in the furtherance of a commercial enterprise. that owns a vehicle with more than four wheels. engaged in the business of transporting by auto for hire. that owns a truck.

engaged in the business of transporting by auto for hire.

Before an alert highway patrolman pulled the vehicle over, a broken valve on Emerson's truck had spilled tar on a ten-mile stretch of highway, damaging cars and causing accidents. The MCS-90 endorsement makes the insurer that issued Emerson' motor carrier policy responsible for not only bodily injury and property damage resulting from this incident but also fines assessed against Emerson. the driver's traffic ticket. damage to Emerson's reputation. environmental restoration.

environmental restoration.

Sandy requires her employees to use their personal autos to make customer calls. Sandy is protected by her business auto policy's $1 million liability limit, but her employees must rely on their personal auto policies for protection. If Sandy adds the employees as insureds endorsement to her BAP, employees who are using their personal cars in her business will have primary coverage under Sandy's business auto policy. excess coverage for losses that exceed their personal auto liability limits. liability protection under the business auto policy, but Sandy will not. to buy personal auto insurance from Sandy's insurer.

excess coverage for losses that exceed their personal auto liability limits.

Ross Toyota's auto dealers policy's "acts, errors or omissions liability coverage" provides coverage against all the following EXCEPT: failure to comply with required disclosures related to odometer readings in the sale or lease of autos liability for defective title arising from the sale or lease of an auto errors or omissions committed by the insured as a licensed insurance agent or broker transacting failure to ensure that a car being sold is in sound mechanical condition nsurance connected with the sale or lease of an auto

failure to ensure that a car being sold is in sound mechanical condition

Rita just bought some stock in a company that owns a fleet of trucks that are used to transport other organizations' cargo for a fee. The company Rita describes appears to be a private carrier livery service public conveyance for-hire carrier

for-hire carrier

Maxi Mini has a contract with the manufacturer to sell new Mini Cooper automobiles. Maxi would be classified as a(n) nonfranchised dealer. nonadmitted dealer. franchised dealer. admitted dealer.

franchised dealer.

Hyde Excavating Company owns many different motorized vehicles. Because it may be difficult to determine whether a specific vehicle will be categorized as an auto or as mobile equipment, Hyde would be well advised to purchase its commercial general liability insurance and its business auto insurance with the same liability limits. from different insurance companies. with different liability limits. from the same insurance company.

from the same insurance company.

Like other garage policies, Beck Buick's policy includes two liability insuring agreements. The first addresses Beck's auto liability exposures, and the second addresses Beck's personal and advertising injury exposures. general liability exposures. contractual liability exposures. personal liability exposures.

general liability exposures.

After her insurance agent explained the options available under a business auto policy, Melinda decided to purchase specified causes of loss coverage, rather than comprehensive coverage, on the trucks in her fleet. Melinda will not have coverage for loss to a covered auto caused by earthquake glass breakage flood theft

glass breakage

Although the physical damage coverage of Arnold's garage policy protects him against loss or damage to many different vehicles, it does not protect him against loss to a vehicle that he owns. is selling. hires. is painting for a customer.

is painting for a customer.

As part of his sales training program, Tyler accompanies Janelle in her calls on their employer's accounts. Janelle's company car has liability coverage under their employer's business auto policy (BAP). Janelle collides with a lamppost and Tyler is injured. His subsequent bodily injury claim against Janelle is not covered by the BAP because of the fellow employee exclusion. covered subject to a deductible. not covered by the BAP because of the contractual liability exclusion. covered if he proves that the accident was caused by Janelle's negligence.

not covered by the BAP because of the fellow employee exclusion.

Besides selling and servicing autos, Fisher Automotive regularly rents autos and pickup trucks. Most of the vehicles are rented by customers whose car is in Fisher's shop being serviced, but cars and trucks are also rented to members of the public. A pickup truck a customer rented for a landscaping project was damaged in an accident. Fisher's auto dealers policy will not pay for the damage. pay for the damage, subject to a deductible, if the policy includes covered autos physical damage coverage that covers a collision. pay for the damage, subject to a deductible, if the policy includes garagekeepers coverage that covers a collision. pay for the damage and subrogate against the driver who rented it.

not pay for the damage.

Buckstar Coffee Company owns a large fleet of trucks that transport coffee, food products, and other supplies to Buckstar restaurants. Based on this description, it would appear that Buckstar is a contract carrier. private carrier. common carrier. for-hire carrier.

private carrier.

When she returned to her company SUV after making a delivery, Kari discovered that a window had been broken and her personal cellphone had been stolen. She immediately reported this to her employer. The SUV is covered by a business auto policy (BAP) that includes comprehensive coverage. To comply with the policy conditions, Kari and her employer must now do all the following EXCEPT: if requested, give the insurer a signed statement regarding the loss. take reasonable steps to protect the property from further damage. promptly notify the police. permit the insurer to inspect the SUV before it is repaired.

promptly notify the police.

When parking his company truck at the end of every business day, Troy backs it into his designated parking space until the truck's bumper touches the fence surrounding the neighboring business's property. This gradually weakens the fence until one day it falls down. The neighboring business that owns the fence asks Troy or his employer to pay for the repairs. According to the employer's business auto policy, the damage to the fence does not qualify as an accident because the damage took place over a period of time. does not qualify as property damage because bumping the fence was intentional. qualifies as property damage because the fence surrounds the neighboring business' property. qualifies as property damage caused by an accident.

qualifies as property damage caused by an accident.

Gilbert, a mechanic employed by Monte Carlo Autos, installed a new power steering pump in Casey's car and then test drove the car to be sure it operated properly. The steering column malfunctioned and the front end of the car was damaged in the resulting accident. Monte Carlo's garagekeepers coverage, which includes garagekeepers comprehensive and collision coverage with none of the direct coverage options, will cover the accident damage to Casey's car and the cost of a new power steering pump. nothing because the accident was caused by defective parts or faulty work. the cost of a new power steering pump but not the accident damage to Casey's car. the accident damage to Casey's car but not the cost of a new power steering pump.

the accident damage to Casey's car but not the cost of a new power steering pump.

Vickie's convertible was in the dealer's shop for an airbag recall when the building was destroyed by a tornado. Because the dealer has a garage policy that includes liability coverage, physical damage coverage, and garagekeepers coverage with the primary direct coverage option, garagekeepers coverage does not apply because the dealer cannot be held legally responsible for a tornado. the dealer's insurer will treat this as a physical damage claim and pay Vickie's loss in full. the dealer's insurer will pay for the loss to Vickie's car and other customers' cars, subject to the policy's limit and deductible. the dealer's insurer will pay any portion of Vickie's loss that her personal auto insurance does not cover.

the dealer's insurer will pay for the loss to Vickie's car and other customers' cars, subject to the policy's limit and deductible.

The garagekeepers coverage of a garage policy will only provide coverage when a loss does not involve negligence by the garage owner. the loss is caused by an Act of God. the owner of the damaged vehicle has no insurance. the insured garage owner is legally liable for the loss.

the insured garage owner is legally liable for the loss.

Beau's limousine was parked outside a church, waiting for the bride and groom, when a hailstorm struck. Although large hailstones pounded the car, the damage was limited to its sheet metal surfaces, which were badly dimpled. After subtracting the deductible, the comprehensive coverage of Beau's business auto policy (BAP) will pay for the limousine's actual cash value at the time of the loss, taking physical depreciation into account. the limousine's actual cash value or the cost to repair or replace it, whichever amount is lowest. the cost to repair the limousine. the cost of replacing the limousine with a comparable vehicle.

the limousine's actual cash value or the cost to repair or replace it, whichever amount is lowest.

Julianne looks out her office window and sees that her company car is being towed. The comprehensive coverage of her firm's business auto policy will cover Julianne's loss if further investigation proves that The car was being towed because it was parked illegally. the car was being repossessed because Julianne's employer failed to make loan payments. police had a warrant to seize the car because it was seen at a crime scene. the tow truck operator was stealing the car.

the tow truck operator was stealing the car.

Bud's truck is insured under a business auto policy (BAP). After work one night, Bud and his girlfriend Haley drive to a pond for a swim. While they were sitting on the banks of the pond, Holly was stung by a wasp and had an allergic reaction that required medical treatment. Bud paid for the treatments and submitted a claim under his business auto policy. However, Bud's insurer denied the liability claim because insect damage is excluded. Bud was legally obligated to pay for Holly's injuries. Holly should have submitted the claim. this is not a claim to which auto liability insurance applies.

this is not a claim to which auto liability insurance applies.

In a trailer interchange agreement, a motor carrier agrees not to use trucks owned by another carrier not to use trailers owned by another carrier to exchange trucks with another carrier to exchange trailers with another carrier

to exchange trailers with another carrier

Deuce Trucking Company has entered into a contract in which Deuce will remain responsible for damage to Trio Trucking Company's trailers that Deuce is using. This contract constitutes a(n) carrier for hire agreement. other insurance provision. trailer interchange agreement. common trailer agreement.

trailer interchange agreement.