Commercial Auto Coverage Practice Questions

Which of the following is not a covered peril under the BAP's Specified Causes of Loss property damage coverage? a. Collision b. Derailment c. Earthquake d. Theft

A. Collision Explanation Collision is not a specified cause of loss. This kind of PD would be covered by collision coverage.

The Business Auto Coverage Form would not cover: a. Tractor-trailer units used in the insured's business b. The insured for the use by an employee of the employee's personal auto in the insured's business c. Private Passenger automobiles owned by the insured and used in the insured's business d. An employee using the employee's personal auto in insured's business

D. An employee using the employee's personal auto in insured's business Explanation Although the Non-owned Autos Only coverage covers the insured for the use of employee's cars in the insured's business, it does not cover the employee.

An individual who uses a truck type vehicle to carry his own cargo would receive auto coverage under which of the following coverage forms: a. Truckers Coverage Form b. Garage Coverage Form c. Owners Coverage Form d. Business Auto Coverage Form

D. Business Auto Coverage Form Explanation This would be a private carrier and the Business Auto Coverage Form would apply.

The Garage Coverage Form may be written for all of the following firms, except a: a. Service station b. Public parking garage c. Car dealership d. Car rental agency

D. Car rental agency Explanation A car rental agency is not eligible as this form is primarily for businesses that sell, service, or store automobiles.

Which type of garagekeepers coverage applies only if the customer has no physical damage insurance? a. Legal Liability Basis b. Direct Primary Basis c. Indirect Primary Basis d. Excess Basis

D. Excess Basis Explanation Excess basis coverage applies regardless of liability, but only if the customer has no physical damage coverage of their own.

All of the following are eligible for a Business Auto Coverage Form, except: a. A private passenger auto that is used in the business b. A forklift used in the business c. A trailer that is used to carry a backhoe d. A can that is used by a delivery firm

B. A forklift used in the business Explanation A forklift, other than by endorsement, is not eligible for auto coverage.

Which of the following is not covered under Section II - Liability of the Garage Coverage Form? a. Products liability b. Damage to the customer's car in the insured's care c. Premise and operations liability d. Completed operations liability

B. Damage to the customer's car in the insured's care Explanation Section II (Liability) Coverage does not cover physical damage to vehicles in the insured's care, custody or control. Section III (Garagekeepers Coverage) does.

The limit of insurance that the insurer will pay for a physical damage loss is determined by which of the following? a. The ACV is the Limit of Liability b. Lesser of ACV or cost to repair or replace c. Greater of the ACV or the cost to repair or replace with like kind d. The replacement cost minus depreciation

B. Lesser of ACV or cost to repair or replace Explanation The most the insurer will pay for damaged or stolen property in any one accident is the lesser of the ACV or the cost of repairing or replacing with property of like kind and quality.

A BAP covering only Owned Private Passenger Autos would include which Symbol? a. Symbol 7 b. Symbol 3 c. Symbol 1 d. Symbol 5

B. Symbol 3 Explanation Symbol 3 covers Owned Private Passenger Autos Only.

Which of the following is true of the Business Auto Coverage Form? a. Non-owned Autos Coverage covers autos leased for a term of 12 months or more by the insured b. The main distinction between a hired auto and a non-owned auto is whether or not the auto is owned by an employee c. Non-owned Autos Coverage covers autos hired for specific purposes by the insured d. Non-owned Autos Coverage covers rented private passenger type vehicles

B. The main distinction between a hired auto and a non-owned auto is whether or not the auto is owned by an employee Explanation The primary use of Symbol 9, Non-owned Autos Only Coverage is to protect the insured when employees use their autos in the insured's business.

Which of the following is a covered peril under the Garagekeepers' Specified Causes of Loss property damage coverage? a. Hail b. Theft c. Wind d. Flood

B. Theft Explanation The specified perils for Garagekeepers coverage are: fire, lightning, explosion, theft, mischief, or vandalism.

Which of the following would be considered a Non-owned Auto? a. An auto leased or hired by the insured b. An auto borrowed by the insured c. An auto owned by the insured's employee while being used in the insured's business or personal affairs d. An auto not used in the insured's business

C. An auto owned by the insured's employee while being used in the insured's business or personal affairs Explanation Symbol 9, Non-owned Autos Only Coverage, provides coverage for only those autos the insured does not own, lease, hire, rent or borrow, which are used in connection with the insured's business. This includes autos owned by the employees or members of their household.

The endorsement that provides evidence of a motor carrier's financial responsibility is called: a. Motor Carrier Act of 1980 b. Trailer Interchange c. Form MCS-90 d. Drive Other Car

C. Form MCS-90 Explanation The Endorsement for Motor Carrier Policies of Insurance for Public Liability (Form MCS-90) provides evidence of financial responsibility, on behalf of the motor carrier, to the Interstate Commerce Commission (ICC). The endorsement must be included in any policy, and the policy must meet the DOT financial responsibility requirements.

Which of the following is not a covered peril under the Garagekeepers' Specified Causes of Loss property damage coverage? a. Theft b. Vandalism c. Hail d. Fire

C. Hail Explanation While hail is a specified peril on the BAP form and under the PD coverage of the garage form, it is not a specified peril under garagekeepers coverage.

For which of the following persons is the Drive Other Car endorsement intended? a. The officers and directors of a corporation b. Truckers and motor carriers c. Individuals who do not own an auto d. Owners of school buses

C. Individuals who do not own an auto Explanation The Drive Other Car endorsement may be added to any of the business auto coverage forms and is designed for individuals who do not personally own and insure an auto.

The Truckers Coverage Form is designed for: a. Only those firms that own and operate tractor-trailer units b. Any firms that operate trucks as a part of their business operation c. Those firms or persons that are in the business of transporting goods or commodities for another d. Firms that lease commercial vehicles from others

C. Those firms or persons that are in the business of transporting goods or commodities for another Explanation The Truckers Coverage Form is written for trucking and freight companies that are in the business of transporting property for others.

Which symbol covers physical damage for dealers? a. 3 b. 30 c. 13 d. 31

D. 31 Explanation Symbol 31 covers dealers' physical damage coverages.

Transportation expenses begin how many hours after the theft of the vehicle? a. 0 hrs b. 24 hrs c. 12 hrs d. 48 hrs

D. 48 hrs Explanation Transportation expenses begin 48 hours after the theft of the vehicle.

Garagekeepers Coverage of the Garage Coverage Form covers: a. Damage to the products that are for sale b. Owned vehicles that are used in the business c. Product liability exposures d. Physical damage to a customer's car that is in the care and custody of an insured

D. Physical damage to a customer's car that is in the care and custody of an insured Explanation Garagekeepers only covers damage to customer's vehicles.

The Garage Liability section of the Garage Coverage Form covers which of the following? a. Property in the care and custody of the insured b. Injuries to an employee that are caused by a fellow employee c. Injuries covered by Workers' Compensation d. Property damage for which the insured is legally responsible

D. Property damage for which the insured is legally responsible Explanation Section II covers property damage liability for which the insured is legally responsible.

Medical payments under the Business Auto Coverage Form include: a. Injuries sustained by employees while on the job b. Bodily injury to anyone while occupying any motorized vehicle having fewer than 4 wheels c. An injury to anyone while occupying a vehicle without a reasonable belief that the person was entitled to do so d. Reasonable, necessary, medical and funeral expense because of bodily injury that is caused by an accident that is sustained by an insured

D. Reasonable, necessary, medical and funeral expense because of bodily injury that is caused by an accident that is sustained by an insured Explanation Medical Payments pays covered expenses of an insured, but not employees

All of the following are true, except: a. Under the Endorsement for Motor Carrier Policies of Insurance for Public Liability, if the insurer is required to pay an excluded loss, it may seek reimbursement from the insured b. A Garage Coverage Form will cover legal liability from completed operations c. Garagekeepers Insurance provides coverage for damage to a customer's car d. Specified Peril Coverage pays for damage to an insured vehicle from almost any cause except collision

D. Specified Peril Coverage pays for damage to an insured vehicle from almost any cause except collision Explanation Specified Peril Coverage (Causes of Loss) provides coverage for only for fire, lightning, or explosion; theft; windstorm, hail, or earthquake, flood, mischief or vandalism, and the sinking, burning, collision or derailment of a conveyance transporting the covered vehicle.

A BAP covering only Mobile Equipment would include which Symbol? a. Symbol 17 b. Symbol 18 c. Symbol 16 d. Symbol 19

D. Symbol 19 Explanation Symbol 19 covers Mobile Equipment Subject to Compulsory or Financial Responsibility or Other Vehicle Insurance Law. The coverage triggers protection for 'mobile equipment' required to be licensed and registered to be operated on public roadways. This symbol is necessary since mobile equipment is excluded from the definition of 'auto' under the Business Auto Policy.

A BAP covering only Owned Autos Subject to Compulsory Uninsured Motorist Law would include which Symbol? a. Symbol 7 b. Symbol 5 c. Symbol 8 d. Symbol 6

D. Symbol 6 Explanation Symbol 6 covers Owned Autos Subject to Compulsory Uninsured Motorist Law.

Choose the false statement regarding commercial auto coverage. a. The form most frequently used for insuring automobiles of a commercial business is the Business Auto Coverage Form b. A Garage Coverage Form - Section II does not provide physical damage coverage to a customer's car c. The Business Auto Coverage Form will cover liability from mobile equipment while being carried or towed d. The Garage Coverage Form - Section II does not include completed operations

D. The Garage Coverage Form - Section II does not include completed operations Explanation The Garage Coverage Form - Section II does cover completed operations.

All of the following are true of the financial requirements for Motor Carriers except: a. Insurer's liability is considered absolute b. Common carriers carry a higher degree of care to their passengers than other operators of motor vehicles do to their passengers c. f the insurer is required to pay an excluded loss, it may seek reimbursement from the insured d. The most common approach to satisfying financial requirements is bonds

D. The most common approach to satisfying financial requirements is bonds Explanation The most common approach to satisfying financial responsibility is insurance.