Chapter 3-C: Personal Auto Insurance Basics

According to the "Definitions" section of a Personal Auto Policy, which of the following would NOT qualify as a "family member"? A. The insured's foster child B. The insured's cousin who is living with the insured C. The insured's ex-wife who moved out of the house 4 months ago D. The insured's adopted daughter

C. The insured's ex-wife who moved out of the house 4 months ago

Mark is driving along and looking for an address on the East side of Walker Street. As he squints to see the numbers posted on the buildings, he plows into the back of a car waiting at a stoplight. Both the driver and the passenger of the struck car are injured. The driver suffers $70,000 in bodily injury, the passenger suffers $65,000 in bodily injury, and the vehicle Mark hit sustains $30,000 in damage. Mark has liability coverage with split limits of 50/100/25, and both injured people carry the minimum PIP for Florida. How much will Mark be responsible for out-of-pocket after this accident? A. $20,000 B. None; Mark is totally covered by his policy. C. $15,000 D. $45,000

A. $20,000

Which of the following is NOT one of the advantages of no-fault insurance? A. It helps to eliminate insurance fraud. B. It reduces the number of liability lawsuits. C. It is a simple and straightforward form of coverage. D. It enables the policyholder to deal directly with her own insurer. Skip

A. It helps to eliminate insurance fraud.

According to the "Definitions" section of a Personal Auto Policy, which of the following is NOT "occupying" her vehicle? A. Rachel leaves her cat in her car, with the windows cracked, while she goes into the drugstore to fill a prescription. B. Trishey is leaning on her car during a lunch break while she eats her lunch. C. Jaminda is sitting on top of her car as she talks to her best friend on the phone. D. Jordan is sitting in her parked car listening to music while she waits for her sister to finish yoga class.

A. Rachel leaves her cat in her car, with the windows cracked, while she goes into the drugstore to fill a prescription.

Which of the following is NOT a reason to buy more insurance than the minimum amount required by Florida? A. Your premiums will be lower when you purchase more coverage. B. Drivers are liable for all damages they cause. C. The cost of an F-250 SuperDuty can be upwards of $60,000. D. An auto policy pays for liability, but only up to the set limits.

A. Your premiums will be lower when you purchase more coverage.

In Florida, Uninsured/Underinsured Motorist Coverage: A. is required in every auto policy, unless the insured declines it in writing. B. cannot be stacked. C. is not available in a Personal Auto Policy. D. is mandatory for all drivers.

A. is required in every auto policy, unless the insured declines it in writing.

Bill carries $10,000 in PIP coverage with a $500 deductible. One day, he accidentally crashes into a car stopped at a red light. The driver of the stopped car is miraculously free from injury, but Bill's medical bills from the collision come to $14,000. How much will Bill's PIP pay for his injuries? A. $10,800 B. $10,000 C. $9,500 D. $11,200

B. $10,000

How much property damage liability coverage must you carry in order to register or drive a car in Florida? A. Property damage liability coverage is not required in Florida B. $10,000 C. $20,000 D. $15,000

B. $10,000

What is the minimum amount of PIP coverage required by the state of Florida? A. $5,000 B. $10,000 C. $50,000 D. $25,000

B. $10,000

In Florida, every driver must have $10,000 in property damage liability coverage and $10,000 in PIP in order to operate a motor vehicle. If the driver is in a wreck and is found to be at fault, how much liability coverage must the driver have for total bodily injury per accident? A. $15,000 B. $20,000 C. $30,000 D. $10,000

B. $20,000

Janine is in a car accident that is covered by her Personal Auto Policy. What information does Janine NOT have to submit to her insurer? A. The report from a damage appraisal B. A list of the witnesses of the accident C. A proof of loss, when requested D. Medical bills from the collision

B. A list of the witnesses of the accident

In a Personal Auto Policy, the term "family member" would include: A. the named insured's ex-husband, who moved out 4 months ago. B. the named insured's 18-year-old daughter, who lives with her husband in New Jersey. C. the named insured's ex-husband, who moved out 5 months ago. D. the named insured's 26-year-old son who lives at home.

D. the named insured's 26-year-old son who lives at home.

Which of the following would NOT be covered under a Personal Auto Policy? A. A passenger car loaned to a friend B. An 18-wheeler with a driver and a passenger C. A passenger car used by a son or daughter who is home from college D. A 15-passenger van weighing 7,200 lbs

B. An 18-wheeler with a driver and a passenger

Taylor is involved in a hit-and-run accident. He is stunned by the encounter and doesn't get the make, model, or license plate of the hit-and-run offender. Which of Taylor's insurance coverages could help him pay for the damages to his car? A. Liability Coverage B. Collision Coverage C. Bodily Injury Uninsured Motorist Coverage D. Comprehensive Coverage

B. Collision Coverage

Which of the following occurrences would be covered under other than collision coverage? A. Jessica's car is confiscated by the federal government. B. Jane's windshield is cracked when she hits a bird. C. Jordan runs over a big pothole and ruins one of his tires. D. Jimmy's car is completely destroyed in a nuclear explosion.

B. Jane's windshield is cracked when she hits a bird.

Julie maintains collision coverage with a $1,000 deductible on her 2007 pickup truck. While returning home from work, Julie swerves to miss a deer and ends up crashing into a telephone pole. Julie's truck sustains $35,000 in damages, yet the actual cash value of the vehicle is only $11,000. Which of the following statements is TRUE? A. Julie will be indemnified by her insurer for $34,000. B. Julie will be indemnified by her insurer for $10,000. C. Julie will be indemnified by her insurer for $11,000. D. Collision coverage will not pay for Julie's accident.

B. Julie will be indemnified by her insurer for $10,000.

Lemon Insurance Co. decides not to renew Hugh's Personal Auto policy, which is set to expire on May 31. Which of the following statements is TRUE? A. Lemon Insurance must notify Hugh at least 10 days before the policy expires. B. Lemon Insurance must notify Hugh at least 45 days before the policy expires. C. Hugh's policy will be effective until 12:00 AM on June 1. D. Hugh's policy will be effective until 11:59 PM on May 31.

B. Lemon Insurance must notify Hugh at least 45 days before the policy expires.

PAP insurance coverage only applies in the "policy territory." Which of the following is NOT part of the policy territory? A. Hawaii B. Mexico City C. San Juan, Puerto Rico D. Ontario, Canada

B. Mexico City

Stan has a personal auto policy to cover his two vehicles, but he recently purchased a custom built motorcycle as well. Which type of endorsement will Stan need to cover the motorcycle? A. Customized Equipment Endorsement B. Miscellaneous Vehicle Endorsement C. Motorcycle Endorsement D. Two-wheeled Vehicle Endorsement

B. Miscellaneous Vehicle Endorsement

Which of the following does NOT count as "bodily injury" according to a personal auto policy? A. Death B. Psychological trauma C. Sickness D. Disease

B. Psychological trauma

Jada has to leave her car in the shop after crashing it into a telephone pole, but she still needs to get to work and back every day. She does some research and, three days after the crash, she buys a bus pass for $85/month. Assuming her car is in the shop for three months and she had previously purchased the additional coverage, which policy provision in Jada's personal auto policy could help cover her bus fare? A. Public Transit Endorsement B. Transportation Expenses C. Medical Transportation D. Workers' Compensation

B. Transportation Expenses

No-fault insurance in a personal auto policy: A. provides liability coverage for a third party, regardless of who is at fault. B. typically only provides coverage for bodily injury. C. is mandatory in all states. D. is limited, but will pay for any damages an insured may cause without requiring proof of loss.

B. typically only provides coverage for bodily injury.

Wilson is a Florida resident who maintains a liability policy with limits of 10/20/10. Recently, he was visiting a friend in Georgia when he ran a red light and hit a BMW, causing $30,000 in property damage. The minimum liability requirement in Georgia is 25/50/25. How much will Wilson's liability insurance pay in this situation? A. $50,000 B. $10,000 C. $25,000 D. $20,000

C. $25,000

One day after buying a nice used car, Ian drives to Cheryl's house to ask her out. On the way, a dog runs out in front of him. Ian veers to avoid the animal, but loses control of his car and crashes into a ditch, causing $16,500 in damage to the car. To make matters worse, Ian hasn't even reported the purchase to his insurer yet, and he doesn't have Collision or Comprehensive coverage. However, Ian need not fret too much. Why is that? A. Since Ian was on his way to see Cheryl, her homeowner's policy will cover his loss. B. Comprehensive and Collision coverage automatically apply to his newly purchased car for the first 14 days after purchase. C. Comprehensive and Collision coverages automatically apply to his newly purchased car for the first 4 days after purchase. D. Since Ian hasn't yet made his first car payment, he isn't responsible for the car.

C. Comprehensive and Collision coverages automatically apply to his newly purchased car for the first 4 days after purchase.

Which of the following would NOT be covered under Part A of a Personal Auto Policy? A. Legal defense costs B. Damage the insured causes while driving his friend's car C. Damage the insured causes to his own garage D. Lost wages

C. Damage the insured causes to his own garage

Nancy and Drew borrow Joe's car so they can have a picnic at the old water tower. On their way to the picnic, Drew accidentally rear-ends Mr. Jackley, causing $2,900 in damage. Whose liability insurance will pay first for the damages? A. Drew's B. Nancy's C. Joe's D. Mr. Jackley's

C. Joe's

In which case would the insured be indemnified by her auto liability coverage? A. She causes property damage to her neighbor. B. She gets into an accident that leaves her car totaled. C. She has to pay a fee to retrieve relevant court documents. D. None; liability coverage never indemnifies the insured.

C. She has to pay a fee to retrieve relevant court documents.

Which of the following is NOT a nearly universal condition of a PAP policy? A. The insured must cooperate with the insurer during the investigation process. B. The insured must file a report for hit-and-run accidents with the police. C. The insured must actively avoid parking in high crime areas. D. The insured must allow the insurer to inspect a vehicle during the claims process.

C. The insured must actively avoid parking in high crime areas.

While driving to work, Harry strikes a pedestrian when she emerges from between two parked cars before Harry has time to react. The pedestrian incurs $28,000 in medical expenses. Harry's insurer decides to pay the claim, but Harry protests, saying the accident was HER fault. Harry knows that, if he is liable, his premiums will skyrocket, so he decides to sue his insurer over the claim. However, this doesn't work because: A. the state where Harry lives is a No-Fault state. B. the judge has an extreme bias against careless drivers. C. the policyholder cannot file a lawsuit against the insurer in order to establish whether he was liable or not. D. the law states that cars must yield to pedestrians no-matter-what.

C. the policyholder cannot file a lawsuit against the insurer in order to establish whether he was liable or not.

Kelly took her eyes off the road and ended up smashing into the back of a passenger van. All five passengers were injured, and each one ended up with $25,000 in medical costs. Assuming Kelly has liability coverage with limits of 50/100/50, how much will she have to pay out of pocket? A. $50,000 B. $10,000 C. $15,000 D. $25,000

D. $25,000

What is the current minimum amount of liability coverage required by the state of Florida for a driver who is found to be at fault in an accident? A. 25/50/10 B. 25/10/50 C. It depends on the value of the car. D. 10/20/10

D. 10/20/10

Jared runs a red light and crashes into a car, injuring the four people inside. All five people involved in the wreck have Personal Injury Protection. Emma gets severe whiplash; Amy suffers permanent scarring on her face; Alexandra has a broken leg, and Adam is paralyzed from the waist down. Florida's no-fault law allows which of these people to sue Jared? A. Alexandra & Adam B. Adam C. Amy & Alexandra D. Amy & Adam

D. Amy & Adam

Hank has collision coverage with a $2,000 deductible on his 2010 truck. One dark, rainy night, Hank's truck slips off the road and rolls over down the embankment. The truck sustains $45,000 in damages, but the actual cash value of the vehicle is only $25,000. Which of the following statements is TRUE? A. Hank will be indemnified by his insurer for $25,000. B. Hank will be indemnified by his insurer for $43,000. C. Collision coverage will not indemnify Hank for this accident. D. Hank will be indemnified by his insurer for $23,000.

D. Hank will be indemnified by his insurer for $23,000.

Driving home from work one night, Judy is pulled over for running a stop sign. When the police officer asks for her insurance information, Judy admits that she only carries $10,000 of property damage liability and PIP in the same amount. What penalty, if any, will Judy face for failing to maintain bodily injury liability coverage? A. Judy's license will be suspended for six months. B. Judy will lose her vehicle registration and driver's license for 3 months. C. Judy must pay a $500 fine. D. Judy does not face any penalty, because she was not at fault in a car accident.

D. Judy does not face any penalty, because she was not at fault in a car accident.

The insuring agreement for Part A-Liability in a personal auto policy states that: A. the insurer will pay for "bodily injury" or "property damage" to any "insured" because of an auto accident. B. the insurer will cover the costs to defend the insured in court in subsequent lawsuits related to the same occurrence, even after the policy limit is reached. C. the insurer will cover the costs to defend the insured in court, up to the policy limit. D. the insurer has the right to settle liability cases out of court.

D. the insurer has the right to settle liability cases out of court.

After a covered accident, your PIP will provide coverage for all of the following, EXCEPT: A. medical costs for your friend who was driving your car with permission. B. your medical costs. C. medical costs for your passenger with no PIP. D. medical costs for the driver you struck.

D. medical costs for the driver you struck.