Chapter 22: AUTO/PAP

17) Which of the following persons is (are) insured under the uninsured motorists coverage of the PAP?

II. The spouse of a named insured who is killed by an uninsured motorist

29) Which of the following statements about the Miscellaneous-Type Vehicle Endorsement to the PAP is (are) true?

II. To lower premiums when a motorcycle is insured, bodily injury to passengers can be excluded.

34) Sarah purchased a Personal Auto Policy with liability limits of 50/100/25. Sarah ran a stop sign and hit a van. The van sustained $15,000 in damages. The following bodily injuries were suffered by passengers in the van: Passenger #1, $15,000; Passenger #2, $60,000; and Passenger #3, $10,000. Sarah sustained $5,000 in medical expenses, and Sarah's car sustained $10,000 in damages. How much will Sarah's insurer pay under Part A: Liability Coverage?

A) $90,000

13) Which of the following is a covered person under the medical payments coverage of the PAP?

A) a family member of the named insured if struck by an auto while crossing the street

3) All of the following are covered autos under the liability section of the PAP EXCEPT

A) a nonowned van which is driven by the insured on a regular basis.

30) Ken purchased a PAP with liability limits of 100/300/50, medical payments coverage, and collision coverage. Ken fell asleep while driving late at night. He crossed the center line and hit a car approaching from the other direction. The following losses occurred: —The driver of the other car suffered $30,000 in bodily injuries. —Ken's car sustained $5,000 in damages. —Ken incurred $5,000 in medical expenses. —The car that Ken hit was a total loss. Which of Ken's Personal Auto Policy (PAP) coverages will cover the other driver's medical expenses?

A) bodily injury liability

39) The purpose of the collision damage waiver when renting an auto is to

A) relieve the renter of financial responsibility if the rented car is damaged or stolen.

51) Dan picked up his friend Rodney to drive to their softball game. Both Dan and Rodney have a Personal Auto Policy (PAP) with $5,000 of medical payments coverage. Dan hit a parked car, and Rodney was injured, incurring $9,000 of medical expenses. How will this claim be settled under the other insurance provision of the PAP?

B) Dan's insurer will pay $5,000 and Rodney's insurer will pay $4,000.

16) Which of the following statements about the uninsured motorists coverage of the PAP is true?

B) The coverage applies only if the uninsured motorist is legally liable.

7) Which of the following situations would be covered by the liability section of an unendorsed PAP if the insured is legally liable?

B) The insured backs into and damages the garage door of his rented house.

49) Which of the following statements is true about uninsured motorists coverage under the Personal Auto Policy?

B) The insured collects from his or her own insurer, and the insurer can recoup the loss payment from the other driver.

50) The appraisal provision in the Personal Auto Policy is used to determine the

B) amount paid for a physical damage loss to the insured's auto if the insured and insurer disagree.

43) If the value of a vehicle is increased after repairs, such as repainting an entire auto when only one fender or door is damaged, the insurer will not pay for the increase in value. Another name for the increase in value is

B) betterment.

44) The 2005 PAP states that the insurer has no duty to provide coverage if the insured fails to comply with certain listed duties. In practice, however, the insurer is only relieved of its duty to provide coverage if

B) failure to comply with the duties is prejudicial to the insurer.

36) Rob purchased a Personal Auto Policy (PAP) with collision and other-than- collision coverage. Which of the following losses would be covered under his policy?

C) A flash flood washed Rob's car off the road and damaged it.

12) Which of the following statements about the medical payments coverage of the PAP is true?

C) Covered expenses include the cost of funeral services.

10) Larry has $25,000 of bodily injury liability coverage under his PAP. This limit is the minimum amount required by his state to be considered financially responsible. While on a vacation, Larry visited a neighboring state which has a minimum financial responsibility limit of $50,000 for bodily injury. Which of the following statements describes the situation for Larry while he was in the neighboring state?

C) Larry's policy automatically provided $50,000 of liability coverage.

11) John occasionally borrows the car of his friend, Sophie. Sophie has a PAP with liability limits of 100/300/50. John also has a PAP, and his liability limits 250/500/50. John had an accident while using Sophie's car and was found to be legally liable for $300,000 in bodily injury liability for injuries suffered by one person. How much will be paid by each policy?

C) Sophie's policy will pay $100,000, John's policy will pay $200,000.

21) Which of the following is considered to be a collision loss under Part D (coverage for damage to your auto) of the PAP?

C) The covered auto is damaged when it slid off an icy road and hit a fence.

27) All of the following statements about the termination provisions of the PAP are true EXCEPT

C) The insurer can cancel the policy after it has been in force for 60 days only if the insured has three or more traffic violations.

18) All of the following are considered to be uninsured vehicles for purposes of the uninsured motorists coverage of the PAP EXCEPT

C) a vehicle owned by an individual who purchased enough liability insurance to satisfy the state's financial responsibility law.

45) Which statement concerning towing and labor coverage under the PAP is (are) true?

None

40) Which of the following statements is (are) true with respect to the collision damage waiver on rented cars?

None are true

25) Duties of an insured after a collision loss covered under the PAP include which of the following?

I. Take reasonable steps to protect the vehicle from further damage.

46) A vehicle is considered a constructive total loss when

B) the repair cost exceeds the actual cash value.

23) All of the following losses are excluded under Part D (coverage for damage to your auto) of an unendorsed PAP EXCEPT

B) theft of a compact disc player which was permanently installed in the auto.

31) Ken purchased a PAP with liability limits of 100/300/50, medical payments coverage, and collision coverage. Ken fell asleep while driving late at night. He crossed the center line and hit a car approaching from the other direction. The following losses occurred. —The driver of the other car suffered $30,000 in bodily injuries. —Ken's car sustained $5,000 in damages. —Ken incurred $5,000 in medical expenses. —The car that Ken hit was a total loss. Which of Ken's Personal Auto Policy (PAP) coverages will cover the damage to Ken's car?

B) collision coverage

26) In addition to providing coverage in the United States, its territories and possessions, and Puerto Rico, where else does the PAP provide coverage?

B) in Canada

41) The purpose of gap insurance is to

B) pay the difference between the amount the insurer pays if a car is a total loss and the amount owed on a lease or car loan.

6) All of the following are covered as supplementary payments under the liability section of the PAP EXCEPT

B) the cost of a bail bond for a traffic violation when no accident is involved.

37) Angie was injured when her car was struck by a driver who ran a red light. The other driver carried the minimum liability coverage necessary to be considered financially responsible. Angie's injuries were $15,000 above the minimum bodily injury limit. There is a coverage that can be added to the PAP that applies when a negligent driver carries the minimum liability insurance required by the state, but is less than the insured's actual damages for bodily injury. This coverage is called

B) underinsured motorists coverage.

35) Patricia purchased a Personal Auto Policy (PAP). Her car was rear-ended by a driver who fled the scene. Patricia suffered whiplash, migraine headaches, and she was unable to work. Which of the following coverages will cover her lost work earnings?

B) uninsured motorists

42) A car damaged in an auto accident may have reduced market or resale value after it is repaired. Some insureds have sought to recover this reduction in market or resale value. This loss in value is called

C) diminution.

15) In which of the following situations would medical payments be paid under an unendorsed PAP?

C) injuries incurred in an auto while it is used in a share-the- expense car pool

28) The purpose of the Miscellaneous-Type Vehicle Endorsement to the PAP is to

C) insure motorcycles, mopeds, motor scooters, and similar vehicles.

32) Ken purchased a PAP with liability limits of 100/300/50, medical payments coverage, and collision coverage. Ken fell asleep while driving late at night. He crossed the center line and hit a car approaching from the other direction. The following losses occurred. —The driver of the other car suffered $30,000 in bodily injuries. —Ken's car sustained $5,000 in damages. —Ken incurred $5,000 in medical expenses. —The car that Ken hit was a total loss. Which of Ken's Personal Auto Policy (PAP) coverages will cover Ken's medical expenses?

C) medical payments coverage

4) All of the following are insured persons under the liability coverage of the PAP EXCEPT

C) the former spouse of the named insured who moved out of the home 2 years ago when the divorce was finalized.

8) What is the purpose of the extended nonowned liability coverage endorsement to the PAP?

C) to provide liability coverage for anyone who loans a covered auto to another driver

22) John has an auto which is covered for collision losses subject to a $250 deductible. Kate's auto also has collision coverage but her deductible is $500. Which of the following statements describes how a $2,000 collision loss will be paid if it occurs when John borrows Kate's car because his car is in the shop for repairs?

D) Kate's policy will pay $1,500, and John's policy will pay $250.

20) All of the following statements about Part D (coverage for damage to your auto) of the PAP are true EXCEPT

D) No coverage is provided for newly-acquired vehicles.

19) Joyce was injured by an uninsured drunk driver while she was riding in a friend's car. Joyce and her friend each have a PAP with an uninsured motorists limit of $50,000. How much will be paid by each policy if it is determined that Joyce has $70,000 of bodily injuries?

D) The friend's policy will pay $50,000, and Joyce's policy will pay $20,000.

38) Dennis was involved in an accident. He believes the damage to his auto is $6,000. His insurer believes the damage is only $3,500. Which PAP provision is designed to handle disputes between the insurer and the insured over the amount of the loss?

D) appraisal provision

47) Owen rents an apartment and parks his car in the lot behind the apartment building. A hailstorm occurred one evening, and his car was severely damaged. Which PAP coverage, if Owen purchased it, would cover this damage to his auto?

D) other-than- collision

33) Ken purchased a PAP with liability limits of 100/300/50, medical payments coverage, and collision coverage. Ken fell asleep while driving late at night. He crossed the center line and hit a car approaching from the other direction. The following losses occurred. —The driver of the other car suffered $30,000 in bodily injuries. —Ken's car sustained $5,000 in damages. —Ken incurred $5,000 in medical expenses. —The car that Ken hit was a total loss. Which of Ken's Personal Auto Policy (PAP) coverages will cover the damage to the car that Ken hit?

D) property damage liability

14) Tony has a PAP which provides medical payments coverage. Under which of the following circumstances would the injured person be eligible for benefits under Tony's policy?

I. A friend in the car is injured while Tony is driving a covered auto.

24) The insurance company's options for settling a collision loss to a covered auto under the PAP include which of the following?

I. Pay the loss in money. II. Repair or replace the damaged auto.

1) Which of the following statements about the liability limits of the PAP is (are) true?

I. The policy can be written with split limits of liability. II. Prejudgment interest is considered part of the damage award and is subject to the policy limit

2) Which of the following statements about the payment of defense costs by the PAP is (are) true?

I. They are paid in addition to the policy limits.

5) Which of the following persons is (are) covered for liability insurance under the PAP?

I. a family member who drives a covered auto II. a family member who occasionally drives a friend's auto

9) Which of the following situations would be covered under the liability section of the PAP?

II. The daughter of the named insured is sued after she has an accident when a new friend she just met at a campus hangout lets her drive his car.

48) Kelly was hit by a car while she was walking to the park. She incurred $750 in medical costs at a hospital emergency room. Kelly has coverage for this charge under which of her Personal Auto Policy (PAP) coverages?

medical payments