AUTO INSURANCE QUIZ

Under a personal auto policy, "the insured" would NOT include

a neighbor using the insureds auto WITHOUT permission a neighbor is not a family member, thus, they would need permission to use the auto. the following WOULD be included under a PAP: -insured's name in declarations -insureds 12 year old son -neighbor using the insured's auto WITH permission

In auto insurance terms, a replacement vehicle on loan from a garage mechanic to be used by an insured until his vehicle is repaired and returned is considered a

temporary substitute vehicle. this non-owned vehicle is covered since its being used as a temporary substitute for a covered vehicle that is out of service

When must an insured show proof of financial responsibility?

when involved in an accident The insured is required to show proof of financial responsibility if involved in an accident, or when requested to do so by an officer of the law.

the limit of liability on business auto coverage may be paid

for each separate accident liability limit on business auto coverage is no different than the liability limit on personal auto coverage . it's the most the carrier will pay out for any one accident.

UIM coverage WILL provide BI sustained by a covered person if:

covered person injured settles a claim with the insurer's consent BI results while a covered person is occupying a covered auto used for carpooling

what would NOT be covered under an automobile policies comprehensive coverage

damage to a covered auto as a result of mechanical breakdown

The Personal Auto Policy, Part A exclusions

use of company car furnished by your employer for your regular use use of the car by an auto mechanic while using it damage to your property while in transit

Ted is involved in a collision loss. His auto policy has a $500 deductible for collision. He incurs damages of $425. How much will his policy pay?

$0 Ted's policy will pay nothing. His collision deductible is $500, which means the company will respond to damages in excess of that figure. Since the loss did not exceed the deductible, no portion of the loss is paid

The insured has just dropped the collision coverage on his car. He lends the car to his daughter who does not own a car. She hits a tree. What statement is true?

there is no coverage for the damage done to the vehicle There is not a grace period in the automobile policy. If you cancel the coverage today, it is deleted at the time you requested it.

If Jim has $100,000 liability coverage under his personal auto policy, how much would the insurer have to pay if the courts awarded a claimant $125,000, the costs of defense was $3,000, and Jim had to take two days off from his job, which cost him $200?

$103,200 ($100,000 liability coverage + $3000 for defense costs + $200/day for lost wages) Supplementary payments cover up to $200 a day for lost wages while the insured is helping the insurer defend in court. The liability coverage would be payable up to the policy limits. The cost of defense on an Auto policy is not a supplementary payment. The cost of defense is part of the insuring agreement, and is in addition to the limits.

Becky returns to the parking lot one evening to discover that her car is missing. The next morning she rents a car to temporarily replace the stolen vehicle. She returned the car 10 days later when the insurance company pays her for the stolen car. Rental car expenses were $300. Her car's insured for other than collision coverage under the personal auto policy. How much of this bill will the insurance company pay?

$160 the personal auto policy will pay $20 per day after a waiting period of 48 hours in the event of theft of the auto. So eight days of rental would be covered at $20/day

Automobile limits of liability expressed as 25/50/10 mean

$25,000 for BI per person, $50,000 for BI per occurrence, and $10,000 for PD per accident. the first number is the most any one person can receive; the second number is the max amount a policy will pay out for all injuries in an accident; the third number is the max amount a policy will pay out for all property damaged in an accident

Uninsured motorists property damage is an optional coverage that has a minimum deductible of

$250 If this optional coverage is purchased, the carrier will fix a damaged auto caused by an identifiable uninsured motorist up to $7,500 with a $250 deductible.

Ann has an automobile insured for $3,000 on a stated amount basis. The automobile is totally destroyed by an insured peril and valued at $3,500 at the time of loss. The policy will pay

$3000 The valued contract is written for a stated amount, which is agreed upon at the time of application. When the auto is damaged, this is the amount that will be used to value the loss. This avoids the difficulty of trying to determine the value of the auto after it has been damaged or destroyed.

The insured is in a rental car. They crash the rental and it takes 20 days to fix. How much will insurance pay for the loss of use of the rental car?

$380 The loss of use provision under the Transportation expense additional coverage will pay $20 per day up to $600 maximum, but the payment begins 24 hours after a collision loss. So in this example the insurer would pay for 19 days for a total of $380

Fred has a personal auto policy with $100,000 bodily injury liability and $50,000 property damage liability limits. He borrows George's car and strikes a pedestrian. George also has $100,000 limit of bodily injury liability. How much will Fred's insurer pay if a $150,000 judgment is rendered against Fred?

$50,000 George's liability coverage goes with his auto as the primary insurance. Fred's insurance will act as an excess carrier.

Mary has a Personal Auto Policy (PAP), with Part A limits of $100,000 / $300,000. She borrows her neighbor's pick-up one day to run an errand, and while using it, accidently strikes a pedestrian causing injury. Her neighbor, Art, also has a PAP policy with Part A limits of $250,000 / $500,000. How much will Mary's policy pay for a $300,000 judgment against her?

$50,000 Mary's PAP includes liability coverage for non-owned autos, but on an excess basis. Since coverage follows the owner as the primary insurer, Art's policy will pay first, paying the total of $250,000 for injury to any one person. Mary's policy will pay the remainder as long as it doesn't exceed her own policy limit for any one person.

The insured has a personal auto policy with limits of $25,000 per person/$50,000 per occurrence for bodily injury. An accident in which three people were injured resulted in suits of $10,000, $22,000, and $28,000. The policy would pay

$50,000 Split limits of liability allow up to $25,000 for each person injured in the accident, with a maximum of $50,000 for any one accident. This accident resulted in losses of $10,000, which would be payable, and $22,000, which would be payable. Only $18,000 of the $28,000 would be payable because of the $50,000 per-accident limit.

Transporting goods or people for a fee is known as a livery service. The Motor Carrier Act of 1980 would require insurance in the amount of _________________ in order to be properly covered.

1 million The act will require a least 1 million of coverage for transporting people or goods for a fee and an MCS-90 will be filed with the Federal Highway Administration.

Which statement is FALSE concerning the liability portion of the personal auto policy?

BI arising from operation of a pickup used for farming is NOT covered A pickup can be used for farming and still be covered by a personal auto policy. The extent of the farming operation that the pickup is used for may be an underwriting concern, but the other three answers are all true.

Uninsured motorist coverage is NOT provided for bodily injury sustained by a covered person if

BI injury results while a covered person is occupying a covered auto property for a fee. use of a vehicle as a taxi or livery service (delivering or picking up goods or people for a fee) is excluded for all coverage under a PAP, including UIM coverage

What is NOT covered by the liability section of an auto policy?

BI of a covered spouse Because of the potential moral hazard and other reasons, the auto policy does not cover liability to the named insured or spouse, or family members who reside with the named insured, for personal bodily injury.

Liability coverage for mobile equipment while in transit on the road is available on which policy form?

BOP liability for equipment is normally covered by the Commercial General Liability policy, except while on a roadway or being transported or towed by a covered auto.

What is covered under the comprehensive coverage, personal auto policy?

Damage from vandals scratching the paint this would be covered under the OTC section, as it involves vandalism and there is no collision involved.

Which one of the following accidents would be covered under the Uninsured Motorist coverage of the personal auto policy?

accident with an at fault driver whose insurance company decline coverage accident with a motorist who has less liability insurance then required by state finanical responsibiity law accident in which a hit and run driver hits insureds coverd auto

Under a personal auto policy, what statement about a newly acquired additional vehicle is FALSE?

automatic liability coverage is provided till the end of policy term the following statements are TRUE regarding PAP and a newly acquired additional vehicle: -automatic coverage is on the same basis as provided to a current vehicle on policy -automatic physical damage coverage does NOT exceed 14 days -pickups or vans used for business, other than farming, must be reported within 14 days.

What loss would NOT be covered under a policy providing automobile comprehensive physical damage?

car runs over a log, causing a blown tire road hazards that do damage to tires, are not covered under the comprehensive section of the auto policy.

Under the Personal Auto Policy, if a driver runs off the road, and damages his car when he hits a tree, the basis for the claim settlement is

collision Impact with an object is a collision unless it involves hitting an animal.

What individual would have liability coverage under his or her own personal auto policy while driving a non-owned auto?

company executive who borrows a neighbors auto to go to the office a PAP excludes any commercial use and the regular use of a non-owned auto.

What individual would possess liability coverage under her own auto policy while driving a non-owned auto?

company executive who borrws a neighbors auto to go to the office Since it is assumed the business firm owning the company auto or the dump truck would have business auto coverage insuring the employee/driver, the personal auto policy excludes these vehicles from coverage.

On a Personal Auto Policy, which of these policy features is NOT a Supplementary Payment?

cost of defense Although cost of defense is covered, it is included as a feature of the Part A, Liability Limit, and not a Supplementary Payment.

Transportation expenses are an additional coverage under the PAP. What is NOT true?

coverage will pay the cost of rental care

What describes the medical expense provisions of the "medical payments" section of the personal auto policy?

covers immediate medical expenses of all occupants in the insureds auto Medical payments cover anyone occupying the covered vehicle. The insured's family is covered for any auto accident.

Which of the following would NOT generally be included in the supplementary payments portion of the auto policy?

damage to property owned by the insured Supplementary payments on an auto policy do not cover the insured's personal property.

The Personal Auto Policy, Part A exclusions include a list of situations not covered. Which of the following is NOT a Part A exclusion?

driving your car in another state Coverage for liability in other states is included in the definition of the territory.

Under the personal auto policy, what person would be EXCLUDED from coverage for bodily injury and property damage liability?

employee of the named insured, while transporting passengers for a fee. employees are NEVER covered under an auto policy; their injuries are better covered under workers compensation. since vehicle is being used as a livery service will cause any claims to be denied Persons NOT excluded from coverage for BI and PD liability under a PAP include: -any person legally responsible for the use of the automobile with insured's permission -any person using the car with permission of insured

Which one of the following is covered under the liability coverage of the business auto coverage form?

explosion If a business auto caused an explosion as a result of an accident, the liability coverage of the business auto coverage form would apply. The other three choices are all excluded.

Which of the following would require the Mobile Equipment endorsement to properly covered under a commercial auto policy?

front end loader The front end loader is not designed to be used on the public roads as a method of transportation and probably does not require a license plate. When used on the roads under its own power, the mobile equipment endorsement is required to make it a covered vehicle on the commercial auto policy.

The insured's neighbor has an uninsured vehicle, which he seldom uses. He gives the insured the keys and advises him to use it whenever he wishes. Under what circumstance is this a covered auto under the insured's PAP policy? The insured

goes to get a new battery because his car has a dead one A non-owned automobile is covered only if it is used as a temporary substitute because your car is not useable due to service, repair, breakdown or destruction.

When a person borrows someone else's auto and has an accident, what would be the situation regarding insurance coverage under a personal auto policy?

if both cars are insured, the owner of the cars policy is primary, but both polices will cover damages Auto coverage goes with the car. The coverage on the borrowed auto would be primary, and the driver's insurance would be secondary.

Uninsured motorist coverage

includes Underinsured (UIM) coverage optional coverage can be purchased up to 100% of the BI limit Uninsured motorist coverage is an extremely important coverage. If someone chooses to purchase it, the amount of coverage cannot exceed the limit for bodily injury liability, and underinsured motorist coverage comes automatically.

Which statement is FALSE regarding Underinsured Motorists?

insured can stack limits from both his and other drivers policy to achieve higher limits State UIM law prohibits payment from exceeding the highest limit on any one policy. An automobile insurance policy may, without regard to any premiums involved, prohibit the stacking of coverages.

What incident would be covered under the "medical payments" section of the personal auto policy?

insured is hit by a car while riding a bike

What loss would be excluded by a policy providing automobile medical payments insurance?

insured is injured when he is underneath the auto and it falls on him while changing the oil "Med pay" will cover any injuries that result from the occupancy of the insured's vehicle. It will also cover the family for injuries caused by occupying any vehicle. Occupying does not include being underneath the auto.

For what would there be coverage under the "medical payments" section of the personal auto policy?

insured jumps off covered pick-up truck, spraining his ankle insured shuts hood on his hand insured is changing a tire when the car falls on him and breaks his leg Medical payments are made to the insured as long as he is "occupying" an auto or struck as a pedestrian by an auto.

In auto insurance, a non-owned auto

is covered if you have the owner's permission to be using the auto. in order for auto policy to cover the use of a non-owned vehicle you must have reasonable belief that the owner gave you permission to use it

what statement regarding the personal auto policy is NOT true

liability coverage excludes non-owned autos. liability does NOT exclude the use of non-owned autos as long as they are used on a temporary basis (e.g. because a covered vehicle is out of service) the following statements regarding the PAP ARE TRUE: -business use of a van or pickup is covered if not used to deliver for a fee -liability coverage is written with a single limits or split limits

under a personal auto policy, which type of physical damage loss is NOT covered?

loss to stereo equipment that is NOT permanently installed auto policy will only pay for equipment that is permanently mounted in the car (and comes even that can be denied), but something that is NOT permanently attached is nOT covered by an auto policy

The physical damage section of the personal auto policy excludes:

mechanical breakdown The physical damage section excludes losses that are predictable such as wear and tear and mechanical breakdown. The other three choices would be covered. -earthquake -flood -theft of auto

What is NOT eligible for insurance under the personal auto policy?

motorcycle The personal auto policy requires that a covered vehicle has four wheels.

Who of the following would be considered an insured for liability coverage under the insured's personal auto policy?

named insureds son who lives with the insured while driving a neighbors car The definition of an insured under the liability portion of the auto policy includes the named insured, spouse and family members meaning those related to you by blood marriage or adoption who reside in your household. Coverage applies for these people for the ownership maintenance or use of ANY auto.

Who is NOT considered insured as a family member under the PAP?

nephew living in another town Your nephew is related to you, but is not a family member since he does not live with you.

The personal auto policy's medical payments coverage would NOT provide protection for which of the following?

occupants of the car that was struck by the insured Medical payments coverage is for you and the people riding in your car.

Specified Perils of Loss is available under the Business Auto Policy as an alternative coverage in lieu of

other than collision Specified Perils is a limited form of OTC.

Patrick is driving too fast on an icy highway when he loses control of his car and collides head-on with Ed. Ed's car is totaled and he suffers a broken spine and pelvis which causes him to miss two months of work. Ed also claims damages for pain and suffering arising out of his injuries. Which of Ed's losses would be considered general damages?

pain and suffering special damages are the actual monetary economic losses incurred. general damages are the non-economic losses suffered in the accident. pain and suffering is a non-economic loss of which the amount of damages is clearly subjective.

UIM coverage is designed to

pay an insured who suffers BI when struck by an at-fault driver who has some, but not enough liability coverage to pay damages

Medical Payment limits under the Personal Auto Policy

per person basis

Which of the following losses would be paid under Part D, physical damage, of the personal auto policy?

permanetly installed CD player was damaged when thieves tried to remove it from car Since the CD player was permanently installed it is considered part of the auto and therefore covered under part D, physical damage of the policy.

Which of these losses would be covered under the personal auto policy liability coverage?

person falls asleep at the wheel of his car and strikes and injures a pedestrian.

in commercial auto insurance, medical payment limits apply per

person, and per accident . limits are set per person, per accident.

Which of the following would be considered a non-owned vehicle using the PAP definition of a Covered Auto, under Part D, Physical Damage?

pick-up truck you rent while your van is in the shop for repair Temporary replacement vehicles are covered for liability and physical damage if your vehicle is out of service.

In a personal auto policy with a $500 deductible, the deductible applies

separately to each physical damage loss.

liability will NOT be excluded on the PAP for

sharing the expense car pools

Lori is critically injured by a hit and run driver while she is driving her car on a work related errand. Her medical expenses, which totaled $50,000, are paid in full by her employer's workers compensation policy. Her injuries are also covered under her personal auto policies uninsured motorist coverage. Assuming she carried $100,000 limits for uninsured motorist coverage, how much would Lori be paid under the personal auto policy?

she would pay nothing. any amount of damage that's collectible from any other source must be subtracted from the available UIM limit. since Lori collected the entire amount of damages from workers compensation insurance, there is nothing payable under the UIM portion of her auto policy

Various optional endorsements may be added to the PAP, EXCEPT

single limit liability Towing covers when a car breaks down. Substitute transportation aka (rental reimbursement) will provide coverage for a substitute auto. Joint ownership covers ownership of a vehicle when unrelated people live in same household. Liability coverage is mandatory according to state law no matter if it is stated as a split limit or a single limit of coverage.

jumbo's Market ceases to operate for a week after its electricity is shut off due to a station wagon striking the transformer supplying electrical current to it. What would be covered by the auto policy covering the station wagon?

spoiled meat in the markets walk in fridge unit Only spoiled meat in the market's walk-in refrigeration unit is directly related, by proximate cause, to the damage arising from the auto accident.

Under the physical damage portion of the personal auto policy, transportation expenses are provided if the insured's car is

stolen If the ""other than collision"" coverage (which includes theft) was purchased on a stolen vehicle, the insurer will pay $20 per day for up to 30 days for transportation expenses. Coverage does not begin until 48 hours after the theft.

The insured has a personal auto policy. He drives his covered van in a share-in-the-expense carpool. What is correct?

the personal auto policy does not exclude coverage for people sharing expenses while carpooling. If the insured was charging a fee for the car pooling, then it would be excluded.

Betsy must miss work to testify at trial concerning an auto accident that she caused. What amount, if any, will the personal auto policy pay for Betsy's lost wages?

up to $200/day. supplementary payments of an auto policy will provide up to $200/day for lost wages if insured misses work to help the insurer settle a claim

Which of the following would NOT meet the definition of an Uninsured Motor Vehicle?

vehicle owned by US govt The U.S. Government is self-insured, and deemed to be financially responsible in all states.

Is any kind of property (other than the auto itself) covered under the physical damage section of the personal auto policy?

yes--- covers standard tools necessary for the auto The standard tools necessary for the auto such as the tire jack would be covered under the physical damage section of the auto policy. personal property of insured is NOT covered

Suzanne has a personal auto policy with limits of 10/20/10 for liability coverage. She causes an accident that results in $12,000 of bodily injury damages to the other driver and $5,000 in property damage to the other driver's car. How much would Suzanne's policy pay for both the BI and PD losses?

$15,000 the maximum any one person can receive for injuries sustained in an accident from her auto policy is $10,000 the $5000 in PD is well within the $10,000 PD limit. so the policy would pay $10,000 for the BI and $5000 for the PD for a total of $15,000

Which one of the following accidents would NOT be covered under the Uninsured Motorist coverage of the personal auto policy?

ACCIDENT with a driver who carries minmum liability limits required by law, but itheir insurance is NOT adequate to cover damages A driver who has insurance but not enough to cover the damages caused in an accident is by definition an underinsured motorist not an uninsured motorist.

The liability section of the garage coverage form includes all of the following, except:

Contractual liability

The commercial auto policy can be very restrictive on the types of vehicles covered, based on the numeric symbol used in the policy. If the owner of a business would like to be covered for the personal use of non-owned autos, he needs to buy what endorsement?

The "drive other car" endorsement allows the insured to be covered on anybody's car driven for personal use.

At what time are automobile policies in effect?

The effective TIME of insurance is always 12:01a.m. at the stated address of the named insured. See the declarations page for this time and the effective date of coverage.

the following are TRUE regarding Transportation expenses under a PAP policy

The policy will pay the insured up to $20 per day for 30 days coverage begins 48 hours after theft of a covered auto you must purchase OTC coverage on your car to get this additional coverage

The personal auto policy covers what persons under the medical payments section?

all occupants of the insured automobile.

A Commercial Auto endorsement that broadens the definition of product liability is a

broad form product coverage