AINS 23 Ch. 8 (Commercial Auto) / CPCU 552 Ch. #4
An Insured keeps his truck in a garage. A deer gets trapped in the garage and, in an attempt to escape, climbs on top of the truck, breaking the windshield and causing several dents in the hood. The Insured's BACF provides physical damage coverage for specified causes of loss with a $100 deductible and collision with a $250 deductible. It will cost the Insured $750 to replace the broken windshield and $1200 to repair the dents. How much, if anything, will the business auto Insurer pay for this loss? A) $0 B) $1600 C) $1700 D) $1850
A
Symbol 9 on the BACF covers: A) Non-owned autos only B) Any auto C) Any owned auto D) Specifically described autos
A
The Rental Reimbursement Coverage endorsement pays the cost to rent a temporary substitute auto when a covered auto has been damaged by any covered cause of loss. Coverage begins: A) 24 hours after the auto was damaged. B) 48 hours after the auto was damaged. C) 72 hours after the auto was damaged. D) 96 hours after the auto was damaged.
A
Ajax Corporation (Ajax) is insured under a Business Auto Coverage Form (BACF) with a $300,000 liability limit. An Ajax employee is involved in an accident while using his own truck to move property belonging to Ajax. The employee's personal auto policy has a $500,000 liability limit. If $600,000 in damages is awarded because of the accident, Ajax's BACF insurer would pay: A) $100,000 B) $200,000 C) $300,000 D) $600,000
A EXPLANATION: Ajax's BACF pays $100,000 over its employee's policy, as the automobile owner's insurance is primary and the non-owner's insurance is excess.
Automobile liability exposures can result from: A) Damage to or destruction of an owned vehicle. B) Hiring or borrowing an automobile. C) Workers compensation laws. D) Loss of use of an owned automobile.
B
A Named Insured often has endorsements to modify the coverage under a BACF. Which one of the following statements about these endorsements is true? A) An uninsured motorists endorsement provides benefits to a covered person whether or not an uninsured motorist is legally liable for the covered person's injuries. B) Benefits paid under an underinsured motorists endorsement typically reduce any workers compensation benefits available to a covered person. C) Personal injury protection endorsements typically provide first-party benefits for medical expenses, loss of income, loss of services, and funeral expenses. D) The Auto Medical Payments Coverage Endorsement must apply to all vehicles insured under the coverage form.
C
An animal damaged the interior of an insured's automobile while it was parked with the windows down. Which one of the following types of physical damage coverage under the Business Auto Coverage Form (BACF) would cover this loss? A) Collision B) Specified perils C) Comprehensive D) Towing and labor
C
Artful Ways is covered by two primary Business Auto policies. Policy A has a $100,000 limit and Policy B has a $300,000 limit. The organization experienced an $80,000 covered loss. Under the other insurance provision Artful's BACF, how much will be contributed under Policy B? A) $20,000 B) $40,000 C) $60,000 D) $75,000
C
A contractor owns an all-terrain vehicle that is used to move equipment around a job site. Because the vehicle can be operated on public roads, it is subject to the state financial responsibility laws. Which one of the following coverage symbols should be on the Insured's BACF for liability coverage to apply? A) Symbol 1—Any Auto B) Symbol 2—Owned Autos Only C) Symbol 5—Owned Autos Subject to No-Fault D) Symbol 19—Mobile Equipment Subject to Compulsory or Financial Responsibility or Other Motor Vehicle Insurance Law Only
D
Acme Insurance cannot agree with Insured Jill Jenkins on the amount of a covered physical damage loss under Jill's BACF. Jill requested a appraisal. Acme and Jill each appoint an appraiser, and the appraisers appointed an umpire. One appraiser and the umpire ruled for Jill and against Acme. Which one the following statements regarding this scenario is true? A) Jill must pay the cost of both appraisers since she requested and initiated the process. B) The appraisal applies not only to the amount of loss, but also to any coverage disagreements. C) Acme lost and therefore must pay the cost of both appraisers and the umpire. D) Jill and Acme must pay their own appraiser and will share the cost of the umpire.
D
Adam is an executive at Blithe Manufacturing (Blithe). He drives a car that is owned by Blithe and insured under the company's BACF. Adam is permitted to drive the vehicle for both business and personal use. One Sunday morning, Adam is driving the car on a highway when he struck by another vehicle and pushed into the guardrail. The car that struck Adam did not stop, but several other people who witnessed the accident did stop. They all confirmed that Adam was struck by another reckless driver who never stopped. Adam was seriously injured and the car was totaled. Which one of the following endorsements to Blithe's BACF would best cover Adam's significant medical expenses and the damage to the vehicle? A) Drive Other Car -- Broadened Coverage for Named Individuals endorsement (CA 99 10) B) Employees as Insured endorsement (CA 99 33) C) Auto Medical Payments Coverage endorsement (CA 99 03) D) Uninsured Motorists Coverage endorsement (UM)
D
In order to provide liability insurance for employees who drive their personal cars on company business, which one of the following endorsements should be added to the BACF? A) Drive Other Car (CA 99 10) B) Employee Hired Autos (CA 20 54) C) Individual Named Insured (CA 99 17) D) Employees as Insureds (CA 99 33)
D
Matthew Jones, the named insured under a Business Auto Coverage Form (BACF), requires his employees to use their own cars for business purposes. One of Matthew's employees, Paul, causes an accident while driving his own truck for the business. Matthew's BACF shows symbol 1 for liability coverage. Which one of the following correctly indicates whether Mathew is an insured under the policy for Paul's use of his own truck in this situation? A) Matthew is not an insured under the policy because Matthew is not the driver of the truck. B) Matthew is not an insured under the policy because Matthew is not the owner of the truck. C) Matthew is an insured under the policy because Paul's truck is a commercial type vehicle. D) Matthew is an insured under the policy because Matthew is an insured for any auto.
D
Symbol 7 on the BACF covers: A) Non-owned autos only B) Any auto C) Any owned auto D) Specifically described autos
D
TRUE/FALSE: A Business Auto Coverage Form (BACF) with Symbol 1 shown for liability coverage will cover the Insured's use of any auto, including rented ones.
TRUE
TRUE/FALSE: An agreement to pay for liability losses incurred by another due to the insured's negligence is covered as an "insured contract" under the Business Auto Coverage Form (BACF).
TRUE
TRUE/FALSE: An employer may be held liable for the acts of employees within the scope of their duties such as operating an employee-owned vehicle while on the job.
TRUE
TRUE/FALSE: Derailment of a conveyance transporting the insured vehicle is one of the covered items under specified cause of loss coverage.
TRUE
TRUE/FALSE: Employee injury (workers compensation exclusion to liability coverage), mechanical breakdown (exclusion to physical damage coverage), and loss to mobile equipment (excluded in definition of "auto") are all excluded under the business auto policy.
TRUE
TRUE/FALSE: Symbol 1 covers the insureds use of any auto, including rented ones.
TRUE
TRUE/FALSE: Symbol 2 covers only owned autos including those that are acquired during the policy period.
TRUE
TRUE/FALSE: The BACF will cover damage from accidents that occur while property is being moved from a covered auto to the place where the property is finally delivered.
TRUE
Employee Emilia uses a company car that has a scheduled limit of $28,000 on a Stated Amount Insurance endorsement to a business auto policy. Immediately before an accident, the actual cash value of the company car is $15,000. If repairs to the car amount to $35,000, how much will the Insurer pay? A) $15,000 B) $20,000 C) $28,000 D) $35,000
A
Henry, who is covered under an unendorsed BACF, uses a mechanical hoist attached to his flatbed truck to lift hay onto a farmer's conveyor belt. While it is lifting the hay, the hoist breaks, causing $1,200 damage to the farmer's conveyor equipment. Is the damage covered under Henry's BACF? A) Yes, because the hoist was attached to a covered vehicle. B) Yes, regardless of whether the hoist was attached to a covered vehicle. C) No, because movement of property by mechanical device is specifically excluded under the policy. D) Yes, but only for $500 because the policy contains a $500 sub-limit for liability due to movement of property by a mechanical device.
A
In applying for the BACF, the Insured mistakenly listed the age of one of its drivers as 28 instead of 22. Which one of the following correctly indicates whether coverage would be void if that driver were involved in an accident? A) Coverage would apply because the misrepresentation was not intentional. B) Coverage would not apply because the Insurer may deny coverage based on fraud by the Insured. C) Coverage would not apply because the Insurer may deny coverage based on misrepresentation of a material fact. D) Coverage would apply because the Insurer will pay any claim but subrogate against the Insured later.
A
Matthew Jones, the named insured under a Business Auto Coverage form (BACF), requires his employees to use their own cars for business purposes. One of Matthew's employees, Paul, causes an accident while driving his own truck for the business.Matthew's BACF shows symbol 3 for liability coverage. Which one of the following correctly indicates why Matthew is not an insured under the policy for Paul's use of his own truck in this situation? A) Matthew is covered for owned private passenger autos only. B) Matthew is covered for hired autos only. C) Matthew is covered for specifically described autos only. D) Matthew was not the driver of the truck.
A
The Butler Corporation provides one of its executives with a company car. The executive does not own any vehicles of his own and would like to have coverage for himself and his wife if either of them rent of borrow vehicles from others. Butler can provides this coverage to the executive by adding which one of the following endorsements to its BACF? A) Drive other car -- Broadened Coverage for Named Individuals B) Individual Named Insured C) Employee Hired Autos D) Employees as Insureds
A
The business auto policy condition that states that the insured must cooperate with the insurer in its investigation and defense of the accident or loss is the: A) Duties in the Event of Accident, Claim, Suit, or Loss Condition. B) Legal Action Against the Insurer Condition. C) Concealment, Misrepresentation, or Fraud Condition. D) Transfer of Rights Against Others Condition.
A
The rental reimbursement endorsement to the Business Auto Coverage Form: A) Covers rental reimbursement expenses incurred after the policy expiration date. B) Pays the cost to rent a temporary substitute auto when a covered auto has suffered a mechanical breakdown. C) Contains one limit--a maximum limit (expressed in terms of days and dollars). D) Begins to pay 48 hours after the vehicle has been stolen.
A
Which one of the following business would likely not be eligible for coverage under the BACF? A) A motor carrier that transports the property of others. B) A local grocery store that also services automobiles. C) A multi-state corporation that prints textbooks for universities. D) A manufacturer of various steel and aluminum tools.
A
Which one of the following combinations of 3 Business Auto Coverage Form (BACF) symbols provides coverage that is most similar to the coverage provided by symbol 1? A) Symbol 2—Owned Autos Only, Symbol 8—Hired Autos Only, Symbol 9—Non-owned Autos Only B) Symbol 2—Owned Autos Only, Symbol 3—Owned Private Passenger Autos Only, Symbol 4—Owned Autos Other Than Private Passenger Autos C) Symbol 3—Owned Private Passenger Autos Only, Symbol 4—Owned Autos Other Than Private Passenger Autos, Symbol 5—Owned Autos Subject to No-Fault D) Symbol 7—Specifically Described Autos, Symbol 8—Hired Autos Only, Symbol 9—Non-owned Autos Only
A
Which one of the following correctly indicates the 3 Business Auto Coverage Form (BACF) symbols that combined are equivalent to symbol 1? A) Symbol 2—Owned Autos Only, Symbol 8—Hired Autos Only, Symbol 9—Non-owned Autos Only B) Symbol 2—Owned Autos Only, Symbol 3—Owned Private Passenger Autos Only, Symbol 4—Owned Autos Other Than Private Passenger Autos C) Symbol 3—Owned Private Passenger Autos Only, Symbol 4—Owned Autos Other Than Private Passenger Autos, Symbol 5—Owned Autos Subject to No-Fault D) Symbol 7—Specifically Described Autos, Symbol 8—Hired Autos Only, Symbol 9—Non-owned Autos Only
A
Which one of the following losses would be covered by the Business Auto Coverage Form (BACF)? A) The insured has agreed to pay for liability losses caused by the insured's negligence that a shipper may incur while the insured is hauling goods for the shipper. B) The insured has to pay an employee's medical bills because of an accident involving one of the insured's vehicles. C) Part of a load of plasma TV screens is damaged when the insured's truck stops suddenly and the TVs slide in the back of the truck. D) Computers the insured has delivered are damaged by rain after the insured leaves them in an open area following delivery.
A
Which one of the following statements about provisions of the Rental Reimbursement endorsement of the BACF is true? A) Reimbursement may extend beyond the policy expiration date. B) The endorsement provides reimbursement only if the cause of loss is theft. C) Rental reimbursement begins to pay 72 hours after the covered loss occurs. D) The daily amount of reimbursement is specified in the endorsement as a maximum of $50 per day.
A
A wholesale and distribution operation has a BACF. The declaration page of the Insurance policy indicates Liability coverage symbol 1 (Any Auto) with a $500,000 limit, Physical Damages Comprehensive and Collision coverage symbol 7 (Specifically Described Autos) and symbol 8 (Hired Autos Only), and a $1,000 deductible. During the policy period, a delivery truck owned and operated by the company was involved in an accident. At the time of the accident, the truck was listed on the policy schedule and was transporting $12,000 of inventory. It was determined that at the time of the accident, the driver was talking on his cell phone. The accident resulted in the following damages: -$23,000 in damages to the truck -$100,000 in liability damages to city property -$200,000 in liability for bodily injury sustained by an employee passenger who sued the company as well as the driver. -$7,500 in damages to the inventory on the truck -$2,200 in cleanup costs related to the spillage of the truck's fuel The accident was promptly reported to the insurance company. Based upon the information provided how much would the insurance company pay under the BACF? A) $124,000 B) $129,500 C) $131,700 D) $330,500
A BUT WHY ****?
Melfor Plastics' business auto policy contains the Rental Reimbursement Coverage endorsement with a 24-hour timed deductible, a daily limit of $50, and a maximum limit of $500 for no longer than 10 days. To replace a damaged car whose repairs are expected to be completed in 5 days, Melfor rents a temporary substitute auto for 5 days on the day the original car was damaged. If the cost of the rental is $50 per day, how much will Melfor's insurer pay? A) $200 B) $250 C) $450 D) $500
A EXPLANATION: There is a time deductible of 24 hours, so the coverage will not begin until after one day of obtaining the rental vehicle. The insurer can choose between the scheduled daily limit or the number of days reasonably required to repair the covered auto, whichever is less expensive. Therefore, Melfor will receive $50 per day for the five days it was in the repair shop, minus the 24-hour time deductible (5 − 1 @ $50 per day = $200).
Ajax Corporation (Ajax) is insured under a Business Auto Coverage Form (BACF) with a $300,000 liability limit. An Ajax employee is involved in an accident while using his own truck to move property belonging to Ajax. The employee's personal auto policy has a $500,000 liability limit. If $600,000 in damages is awarded because of the accident, Ajax's BACF insurer would pay: A) $100,000. B) $200,000. C) $300,000. D) $600,000.
A EXPLANATION: Ajax's BACF pays $100,000 over its employee's policy, as the automobile owner's insurance is primary and the non-owner's insurance is excess.
Which one of the following property loss exposures can a business most likely avoid by leasing an auto instead of buying it? A) Decrease in or loss of the auto's value B) Employers non-ownership liability C) Cost of auto repairs D) Liability to parties injured by the operation of the auto
A EXPLANATION: Since the business does not own the leased auto, it doesn't face a loss if the auto's value drops.
Lime Green Paper Company owns three cars and a pickup truck. Lime Green's sales employees use their own vehicles for business. Lime Green is insured under a Business Auto Coverage Form (BACF) form with symbol 1—Any Auto for liability coverage and symbol 2—Owned Autos Only for physical damage and medical payments coverages. One of Lime Green's employees caused an accident while driving his own car on company business, damaging another auto and injuring the driver and two passengers. Lime Green's employee was injured in the accident, and his car was damaged.Which one of the following correctly indicates the coverage that Lime Green's BACF provides for this loss? A) Liability coverage for the damage to the other auto and injuries to the other driver and passengers B) Physical damage coverage for Lime Green's employee's car C) Medical payments coverage for Lime Green's employee D) Physical damage coverage for damage to the other auto
A EXPLANATION: Symbol 1 provides liability coverage for the use of any auto, including autos owned by employees. Symbol 2 does not apply because Lime Green does not own the auto.
Lime Green Paper Company owns three cars and a pickup truck. Lime Green's sales employees use their own vehicles for business. Lime Green is insured under a Business Auto Coverage Form (BACF) form with symbol 1—Any Auto for liability coverage and symbol 2—Owned Autos Only for physical damage and medical payments coverages. One of Lime Green's employees caused an accident while driving his own car on company business, damaging another auto and injuring the driver and two passengers. Lime Green's employee was injured in the accident, and his car was damaged.Which one of the following correctly indicates the coverage that Lime Green's BACF provides for this loss? A) Liability coverage for the damage to the other auto and injuries to the other driver and passengers B) Physical damage coverage for Lime Green's employee's car C) Medical payments coverage for Lime Green's employee D) Physical damage coverage for damage to the other auto
A EXPLANATION:Symbol 1 provides liability coverage for the use of any auto, including autos owned by employees; Symbol 2 does not apply because Lime Green does not own the auto.
A common endorsement to the Business Auto Coverage Form (BACF) is the Employee Hired Auto endorsement. This endorsement states that an employee of the Named Insured is an Insured: A) While operating his/her personal vehicle on the Named Insured's behalf. B) While operating an auto rented in the employee's name with the Named Insured's permission. C) While operating a vehicle rented, owned, or borrowed by the Named Insured. D) Only when the vehicle being used by the employee is rented to the Named Insured.
B
An Insured's BACF may include the Uninsured/Underinsured Motorists Coverage endorsement because: A) A statute may require that uninsured/underinsured motorists coverage is primary coverage over workers compensation benefits. B) A lrgal requirement in some states requires that uninsured/underinsured motorists coverage be purchase.d C) The "Uninsured Motorists" coverage portion will provide additional limits if the Insured's Section II-Liability Coverage limits are less than the amount of damages awarded to a claimant. D) It is cost-effective to pair uninsured/underinsured motorists coverage with the minimum limits required by the state financial responsibility laws.
B
An endorsement to the BACF that limits the Insurer's liability for physical damage loss to the least of the actual cash value (ACV), the cost to repair/replace, or the limit of insurance shown for the covered auto in the endorsement's schedule is called the: A) Scheduled Insurance Limit endorsement. B) Stated Amount Insurance endorsement. C) Agreed Value endorsement. D) Specified Limits Coverage endorsement.
B
Big Corporation leases automobiles for its employees to drive on business. In addition, a few employees use their own cars in performing their job duties. Which one of the following automobile loss exposures exists for Big Corporation? A) Bailee loss exposure B) Employers non-ownership liability loss exposure C) Operations liability loss exposure D) Products and completed operations liability loss exposure
B
If an employee rents a car in his or her own name and uses the auto to conduct his or her employer's business, which one of the following endorsements of the Business Auto Coverage Form would ensure that there is coverage if the employee is in an accident? A) Drive Other Car endorsement B) Employee Hired Autos endorsement C) Rental Reimbursement Coverage endorsement D) Broadened Coverage for Named Individuals endorsement
B
If an employee rents a car in his or her own name and uses the auto to conduct his or her employer's business, which one of the following endorsements of the Business Auto Coverage Form would ensure that there is coverage if the employee is in an accident? A) Drive Other Car endorsement B) Employee Hired Autos endorsement C) Rental Reimbursement Coverage endorsement D) Broadened Coverage for Named Individuals endorsement
B
On January 1, an Insurance company decides to increase its supplementary payments for lost earnings under a coverage extension for liability coverage from $250 a day to $500 a day, without increasing premiums. This change is to be effective February 1. Allen's BACF renews on May 1. This change will affect Allen's policy on: A) January 1 B) February 1 C) March 15 D) May 1
B
One of the conditions found in the Business Auto Coverage Form addresses the bankruptcy or insolvency of the named insured. Which one of the following statements about claims settlement in the event of bankruptcy of the insured is most accurate? A) If the insured is relieved through bankruptcy of an obligation to pay a liability claim, the plaintiff becomes an unsecured creditor of the insurer. B) If the insured is relieved through bankruptcy of an obligation to pay a liability claim, the insurer is still obligated to pay the loss. C) If the insured is relieved through bankruptcy of an obligation to pay a liability claim, the claim is then sent to binding arbitration for settlement. D) If the insured is relieved through bankruptcy of an obligation to pay a liability claim, the insurer is also relieved of any obligation to pay the loss.
B
One of the general conditions in Section IV of the BACF states that if the Insurer revises the form to provide more coverage without additional premium charge, the policy will automatically provide the additional coverage as of the date the revision is effective in the Named Insured's state. This condition is referred to as: A) Subrogation B) Liberalization C) Additional Insurance D) Other Insurance
B
Robert has a BACF with limits of liability of $500,000. A claimant is suing Robert for $1,000,000 because of an accident involving one of Robert's trucks. Before a jury can render a judgment, Robert files for bankruptcy. If the jury subsequently finds in favor of the claimant for $1,000,000, the Insurer will pay: A) $0 B) $500,000 C) $1,000,000 D) $1,500,000
B
Symbol 1 on the BACF covers: A) Non-owned autos only B) Any auto C) Any owned auto D) Specifically described autos
B
The Employees as Insureds endorsement on a business auto coverage form extends coverage to: A) Include employees as insureds while using the named insured's owned autos on the named insured's behalf. B) Include employees as insureds while using their own autos on the named insured's behalf. C) Include employees as insureds while using autos rented in their own names. D) Include the cost of rent of a temporary substitute auto when a covered auto has been damaged by any covered cause of loss.
B
The Employees as Insureds endorsement on a business auto coverage form extends coverage to: A) Include employees as insureds while using the named insured's owned autos on the named insured's behalf. B) Include employees as insureds while using their own autos on the named insured's behalf. C) Include employees as insureds while using autos rented in their own names. D) Include the cost of rent of a temporary substitute auto when a covered auto has been damaged by any covered cause of loss.
B
The Hometown Hotel (HH) owns 3 vans which it insures under a BACF with the rental reimbursement coverage endorsement (CA 99 23). The endorsement has a limit of $20 per day and a maximum limit of 30 days or $600. On March 1st, one of the hotel's employees hits the side of the building while trying to park one of the vans. The body shop advises HH that it will take 3 weeks to repair the van. It is peak vacation season and HH needs to rent a replacement van at $30 a day. When the van is finished and HH returns the rental van, the rental bill is $630 or $30 a day for 21 days. How much, if any, will HH's auto Insurer pay under the rental reimbursement coverage endorsement? A) $0 B) $400 C) $420 D) $600
B
Tom's CD player was stolen from the front seat of his van while he was making a service call for a customer. Under the Business Auto Coverage Form (BACF), this loss is: A) Prohibited B) Excluded C) Covered D) Endorsed
B
Tom's CD player was stolen from the front seat of his van while he was making a service call for a customer. Under the Business Auto Coverage Form (BACF), this loss is: A) Prohibited. B) Excluded. C) Covered. D) Endorsed.
B
Two salespeople are traveling in an auto owned by their employer. The vehicle is insured under an unendorsed BACF. Symbol 2 has been used to activate liability coverage and no other coverages have been elected. While on a sales call, the driver swerves off the road injuring the other salesperson. The passenger sues the driver to recover damages for medical expenses and therapy. Based on the company's BAC, there is: A) Coverage under medical payments. B) No coverage for a suit by one employee against a fellow employee. C) No coverage since the vehicle is described as Symbol 2. D) Coverage provided by Section II -- Liability Coverage.
B
Which one of the following would be the most appropriate symbol to show on the schedule of coverages and covered autos of the Business Auto Coverage Form (BACF) if the insured wants to cover only autos owned at policy inception and any others that might be acquired later? A) Symbol 1 — Any Auto B) Symbol 2 — Owned Autos Only C) Symbol 8 — Hired Autos Only D)Symbol 9 — Non-owned Autos Only
B
Which one of the following statements regarding liability coverage under the Business Auto Coverage Form (BACF) is true? A) Covered pollution cost or expense is paid in addition to the stated limit of liability. B) The insurer must defend against even false or fraudulent claims or suits as long as they allege covered damages. C) The coverage form defines "suit" to include a civil proceeding but not other alternative dispute resolution proceedings. D) The costs of defending the claim are subject only to the limits of insurance carried on the policy.
B EXPLANATION: The cost to defend a claim is in addition to the limit of insurance.
In the liability coverage agreement of the Business Auto Coverage Form (BACF), the insurer expresses its three distinct duties. Which one of the following identifies one of those duties? A) A duty to insure all vehicles owned by the named insured B) A duty to pay covered pollution cost C) A duty to comply with laws and regulations D) A duty to renew the policy
B EXPLANATION: The insurer agrees to pay covered pollution costs, to pay damages, and to defend the insured.
Baker Company's salesperson negligently injures a pedestrian while driving a Baker Company vehicle on a sales call. Under which one of the following legal doctrines could the pedestrian hold Baker Company responsible for injury caused by the negligence of its employee? A) Res ipsa loquitor B) Stare decisis C) Respondeat superior D) Nolo cotendre
C
Betty was in an auto accident that destroyed $1,000 of property belonging to her neighbor Tom, for whom she was delivering it as a favor. How will Betty's Business Auto Coverage Form respond to a third party claim from Tom? A) There is a $500 policy sub limit that will be paid under Betty's Business Auto Coverage Form. B) Betty's Business Auto Coverage Form will pay Tom for the full amount since the property was in her care, custody and control. C) The claim would be denied. Betty would need motor truck cargo insurance to cover Tom's property when she is transporting it. D) Property of others is specifically excluded in the Business Auto Coverage Form.
C
Bob owns a chain of furniture stores. Bob is the Named Insured on a BACF with an Auto Medical Payments Coverage endorsement and regularly operates a company owned vehicle to transport potential clients to his various stores. One day, while Bob is driving with 2 clients, he loses control of the car, strikes one of his employees standing in the parking lot, and crashes into a parker car. As a result of the accident, Bob incurs $500 worth of medical expenses. Each client incurs $1,000 worth of medical employees, and the employee incurs $1,200 worth of medical expenses. How much coverage will Bob's business auto policy provide for medical payments? A) $500 B) $1,700 C) $2,500 D) $3,700
C
Emily has just accepted a new position with Argot Industries (Argot). She is a sales representative and will be expected to call on current and prospective customers in her territory. Emily will use her own car to make the sales calls, and Argot will reimburse her for gas and tolls. She has a Personal Auto Policy (PAP) with the minimal mandatory liability limits, but is curious if she is covered under Argot's BACF while driving her car for Argot business. Which one of the following endorsements, if any, would need to be part of Argot's BACF to provide liability coverage for Emily while she is driving her car for Argot's business? A) Employee Hired Auto (CA 20 54) B) Drive Other Car -- Broadened Coverage for Named Individuals (CA 99 10) C) Employees as Insureds (CA 99 33) D) No endorsement is required
C
If an Insured has failed to cooperate with an Insurer in the settlement of a claim, which one of the following policy conditions prevents the Insured from suing the Insurer if the Insured is not satisfied with the Insurer's handling of the claim? A) Duties in the Event of Loss B) Appraisal for Physical Damage Losses C) Legal Action Against the Insurer D) Transfer of Rights Against Others
C
Joan has a Business Auto Coverage Form (BACF). Which one of the following losses would be covered as auto physical damage? A) Collision damage while drag racing at the local raceway. B) Damage to an engine that froze during the winer. C) The cost to repair vehicle damage that results from hitting a deer. D) The cost to repair a tire after a blowout on the road.
C
Kenneth, the named insured under a Business Auto Coverage Form (BACF) with symbol 1 shown for liability coverage, causes an automobile accident while driving a rental car on a business trip. Which one of the following correctly indicates whether Kenneth is covered under the liability insuring agreement of his BACF for this accident? A) Kenneth is not covered because liability coverage for rental cars used for business purposes is excluded. B) Kenneth is not covered because the rental car is not a specifically described auto. C) Kenneth is covered because Kenneth, the named insured, is an insured for any auto. D) Kenneth is covered because Kenneth is at fault for the accident.
C
Kenneth, the named insured under a Business Auto Coverage Form (BACF) with symbol 1 shown for liability coverage, causes an automobile accident while driving a rental car on a business trip. Which one of the following correctly indicates whether Kenneth is covered under the liability insuring agreement of his BACF for this accident? A) Kenneth is not covered because liability coverage for rental cars used for business purposes is excluded. B) Kenneth is not covered because the rental car is not a specifically described auto. C) Kenneth is covered because Kenneth, the named insured, is an insured for any auto. D) Kenneth is covered because Kenneth is at fault for the accident.
C
Matthew Jones, the named insured under a Business Auto Coverage Form (BACF), requires his employees to use their own cars for business purposes. One of Matthew's employees, Paul, causes an accident while driving his own truck for the business. Matthew's BACF shows symbol 1 for liability coverage. Which one of the following correctly indicates whether Paul is an Insured under the policy for the accident? A) Paul is covered because employees are considered Insureds for any auto. B) Paul is covered because Matthew has given permission for Paul to drive his own truck. C) Paul is not covered because employees are not Insured while using their own autos in the Named Insured's business. D) Paul is not covered because employees are not Insureds for any use of any auto.
C
One of the conditions in the Business Auto Coverage Form addresses physical damage losses where the Named Insured and the Insurer disagree about teh amount of a covered loss. Which one of the following statements concerning those conditions is most accurate? A) The Named Insured is required to hire an independent appraiser to assess the damages, and the findings of the appraiser are binding. B) The Named Insured is required to consent to the appraisal value determined by the Insurer, otherwise the Named Insured will forfeit coverage. C) Both the Named Insured and the Insurer hire and pay their own appraisers and then share the cost of hiring an umpire. D) The Insurer is required to hire an umpire at its own expense to establish the final cost of any disputed losses.
C
Symbol 2 on the BACF covers: A) Non-owned autos only B) Any auto C) Any owned auto D) Specifically described autos
C
The Employees as Insureds endorsement of the BACF: A) Supplements the business coverage for employees with coverage similar to those in a Personal Auto Policy B) Covers Named Employees who are provided with company cars if they rent or borrow vehicles from others. C) Covers employees while driving their own cars on the Named Insured's behalf. D) Covers employees while operating autos rented in the employees' name while on the Named Insured's business.
C
The Insured has a business auto policy. Vandals break a window in the Insured's pickup truck. While the Insured is waiting for the Insurance company to appraise the claim, rain enters through the broken glass and causes additional damage. What is the Insurance company's liability for the loss? A) The insurance company is liable for the damage by the vandals and the damage from the rain. B) The insurance company is liable for the damage from the rain but not the damage by the vandals! C) The Insurance company is liable for the damage by the vandals but not the damage from the rain. D) The Insurance company is not liable for either the damage by the vandals or the damage from the rain.
C
Under the BACF, collision is generally understood to mean: A) Collision only with another vehicle. B) Any incident in which a vehicle loses its equilibrium. C) A striking together with violent impact. D) The striking together of a vehicle with any object that is not a vehicle.
C
When an Insured requests the Social Service Agencies-Volunteers as Insureds endorsement, the Insurer often requires the Named Insured to: A) Submit a request in writing, which should include the list of names of the potential Insured volunteers. B) Present evidence that each Insured is a volunteer and not an employee of the organization. C) Present evidence that each Insured volunteer has auto liability insurance in effect with certain minimum limits of insurance. D) Also add the Employees as Insureds endorsement in order to clarify coverage and prevent coverage gaps.
C
Which one of the following statements about the appraisal condition in Section IV of the Business Auto Coverage Form (BACF) is true? A) It applies to both liability and physical damage losses. B) It applies primarily when there are disagreements about whether there is coverage for a particular loss. C) It may lead to a binding settlement, even if the appraisers for the named insured and the insurer cannot agree. D) It provides for the appraisal costs to be paid as a supplementary payment that has no effect on policy limits.
C
Which one of the following statements about the general conditions under Section IV of the Business Auto Coverage Form (BACF) is true? A) Bankruptcy of an Insured relieves the Insurer of any obligations under the form to that Insured. B) The premium shown in the declarations is the minimum amount the Named Insured will pay during the policy period. C) Coverage for trailers follows the autos to which they are attached. D) The coverage territory is worldwide for autos rented with a driver.
C
Which one of the following symbols in the Business Auto Coverage Form (BACF) indicates personal injury protection (PIP) coverage is provided for those autos that are required by law to have it? A) Symbol 3—Owned Private Passenger Autos Only B) Symbol 4—Owned Autos Other Than Private Passenger Autos C) Symbol 5—Owned Autos Subject to No-Fault D) Symbol 6—Owned Autos Subject to a Compulsory Uninsured Motorists Law
C
The insured has a Business Auto Coverage Form (BACF). When the insured's truck was destroyed in a fire, the insurer offered him $20,000 for the loss. The insured valued his loss at $35,000. Each party selected an appraiser, and the two appraisers chose an umpire. The insured's appraiser came up with a value of $30,000, while the insurer's appraiser came up with a value of $24,000. The umpire agreed with the insured's appraiser. The fee for the insured's appraiser was $750, the insurer's appraiser was $950, and the umpire was $600. The total cost to the insurance company for this loss is: A) $30,000. B) $30,950. C) $31,250. D) $31,550
C EXPLANATION: The total cost to the insurance company for this loss is $31,250. The insurance company will pay for the amount of loss agreed to by two of the three appraisers, the fee for its own appraiser, and half of the cost for the umpire.
Three employees of a hardware store damaged a tile floor while moving concrete pavers from their delivery truck to an outdoor patio shop. Many of the pavers were also damaged during the move. How will the hardware store's Business Auto Coverage Form apply to this loss? A) The Business Auto Coverage Form does not provide liability coverage for property in transit. B) The Business Auto Coverage Form will cover only the damage to the pavers. C) The Business Auto Coverage Form will cover only the property liability for the damage to the tile floor. D) The Business Auto Coverage Form will pay for damage to the pavers as well damage to the floor.
C EXPLANATION: Damage to the pavers is not covered because of the care, custody, or control exclusion.
Bob, an employee of Tank's Trucks, is backing one of Tank's trucks toward the loading dock on the Insured premises. Bob accidentally strikes Alice, another employee, while she is directing Bob toward the loading dock. Alice sues Bob for her injuries. Which one of the following correctly indicates whether Bob is covered under Tank's unendorsed BACF for liability coverage? A) Bob is covered because Bob was driving a truck owned by the Named Insured. B) Bob is covered because employees are Insureds for any use of an Insured auto. C) Bob is not covered because Alice's health insurance should cover her medical expenses. D) Bob is not covered because fellow employees' suits are excluded.
D
Personal Injury Protection (PIP) is an optional endorsement to the Business Auto Coverage Form (BACF) that: A) Eliminates the Fellow Employee exclusion regarding bodily injury to fellow employees of the Named Insured. B) Is uniform throughout the states and typically provides first-party benefits for medical expenses. C) Does not apply if the Insured is negligent to any degree. D) In many states is required to be purchased by the Insured or offered by an Insurer.
D
The specified causes of loss coverage of the business auto policy includes coverage for which one of the following? A) Towing and labor costs resulting from disablement. B) Direct and accidental loss or damage resulting from overturn. C) Glass breakage whether caused by collision or some other cause. D) Derailment of a conveyance transporting the insured vehicle.
D
When the Named Insured under a Business Auto Coverage Form is a sole proprietor, the policy can be amended by endorsement to provide the same liability coverage to the Named Insured and family members that he/she could obtain under a Personal Auto Policy using the: A) Business Auto Named Driver (CA 99 32) endorsement B) Employees as Insureds (CA 99 33) endorsement C) Drive Other Car -- Broadened Coverage for Named Individuals (CA 99 10) endorsement D) Individual Named Insured (CA 99 17) endorsement
D
Which one of the following BACF symbols requires that the Insured notify the Insurance company within 30 days of acquiring a new auto of the same type already Insured for coverage to apply? A) Symbol 1—Any Auto B) Symbol 2—Owned Autos Only C) Symbol 5—Owned Autos Subject to No-Fault D) Symbol 7—Specifically Described Autos
D
Which one of the following endorsements to the BACF covers employees when renting vehicles in their own names to conducts the employer's business? A) Employees as Insureds B) Rental Reimbursement C) Drive Other Car -- Broadened Coverage D) Employee Hired Autos
D
Which one of the following statements about the loss conditions in Section IV of the BACF is true? A) Under certain circumstances, the Named Insured can commit the Insurer to make payments for damages. B) If the Insurer pays a loss, the Named Insured can waive the Insurer's right of recovery against a negligent third party who cause the loss. C) The Named Insured may begin legal actions against the Insurer before complying with all provisions of the coverage form. D) Anyone seeking coverage under the form must submit to physical examinations by physicians as often as the Insurer may reasonably request.
D
Which one of the following statements best describes the purpose of the Drive Other Car -- Broadened Coverage for Named Individuals endorsement to the ISO Business Auto Coverage Form (BACF)? A) This endorsement adds the names of the individual partners to the BACF when the Named Insured is a partnership. B) This endorsement increases the limits of liability for the BACF sufficient to meet the requirements of an umbrella liability policy. C) This endorsement adds temporary employees to the list of persons covered under the BACF. D) This endorsement extends coverage to employees who are Named Insureds under the BACF that might have occasions to drive an uninsured vehicle that would not otherwise be a covered auto.
D
Which one of the following symbols used in the Business Auto Coverage Form (BACF) is correctly described? A) Symbol 1 — Owned Autos Only B) Symbol 2 — Owned Private Passenger Autos Only C) Symbol 7 — Hired Autos Only D) Symbol 9 — Non-owned Autos Only
D
Wilson was driving his business auto when it was struck by a hit-and-run driver. HE looked to his business auto policy for coverage for his injuries. Which one of the following symbols shown on his policy automatically provides such coverage? A) Symbol 2—Owned Autos Only B) Symbol 3—Owned Private Passenger Autos Only C) Symbol 5—Owned Autos Subject to No-Fault D) Symbol 6—Owned Autos Subject to a Compulsory Uninsured Motorists Law
D
Which one of the following symbols used in the Business Auto Coverage Form (BACF) is correctly described? A) Symbol 1—Owned Autos Only B) Symbol 2—Owned Private Passenger Autos Only C) Symbol 7—Hired Autos Only D) Symbol 9—Nonowned Autos Only
D EXPLANATION: Symbol 9 covers Non-owned autos only; Symbol 1 applies to any auto; Symbol 2 applies to any owned auto, and Symbol 7 applies to specifically described autos.
Bilo Manufacturing is weighing whether to lease vehicles for its employees or have them drive their own autos while on company business. Which one of the following exposures is created if Bilo decides in favor of employee-owned autos? A) Hired Auto B) Borrowed Auto C) Physical Damage D) Employer's Non-ownership Liability
D EXPLANATION: Bilo has neither hired nor borrowed the employee's auto but they could still be held liable if the employee negligently injures a third party.
Bilo Manufacturing is weighing whether to lease vehicles for its employees or have them drive their own autos while on company business. Which one of the following exposures is created if Bilo decides in favor of employee-owned autos? A) Hired Auto B) Borrowed Auto C) Physical Damage D) Employer's Nonownership Liability
D EXPLANATION: Bilo has neither hired nor borrowed the employee's auto, but they could still be held liable if the employee negligently injures a third party.
A named insured's employee rents an auto while on a business trip and is involved in an accident. Which one of the following symbols on the business auto policy would provide coverage for the named insured? A) Symbol 5—Owned Autos Subject to No-Fault B) Symbol 7—Specifically Described Autos C) Symbol 8—Hired Autos Only D) Symbol 9—NonOwned Autos Only
D EXPLANATION: Symbol 9 applies since the auto was not rented by the named insured.
There is a stipulation with the Employee Hired Autos Endorsement that an employee is covered only: A) When the employer has at least the minimum insurance limits that are set by the insurer in the business auto policy. B) For three months after which the hired auto must be scheduled into the policy. C) When the auto is hired under the name of the named insured and/or the named insured's business. D) While performing duties related to the conduct of the named insured's business.
D EXPLANATION: The employee is covered only while performing duties related to the conduct of the named insured's business.
Joe Motors is an automobile repair shop. Which one of the following would be the best way for the owner to maintain the goodwill of its customers? A) Raising liability limits under its business auto insurance. B) Lowering the physical damage deductible under its business auto insurance. C) Purchasing garage liability insurance. D) Purchasing GarageKeepers insurance.
D EXPLANATION: The main purpose of GarageKeepers Insurance is the protection of a customer's Goodwill.
Mitchell is a highway contractor whose company is covered with a workers compensation policy and an unendorsed Business Auto Coverage Form (BACF). Which one of the following losses would be covered by his business auto policy? A) One of his employees is injured while making a delivery to a job site. B) One of his autos has an engine breakdown on the road and has to be repaired. C) Vandals damage a bulldozer at a construction site after the end of the workday. D) An employee runs over a subcontractor's equipment with an owned auto.
D EXPLANATION: This is covered as it is property damage, and no exclusions apply to the situation.
TRUE/FALSE: The Employee Hired Autos endorsement states that an employee of the named insured is an insured while operating an auto rented in that employee's name, while performing duties related to the conduct of the named insured's business and with the named insured's permission.
TRUE
TRUE/FALSE: The Employees as Insureds endorsement covers any employee of the named insured while using any covered auto that the named insured does not own, hire, or borrow in the named insured's business or personal affairs. It includes employees as insureds while using their own autos on the named insured's behalf.
TRUE
