Checkpoint Exam Unit 8: Personal Auto Insurance

Participating insurance companies have agreed to share the risk of insuring individuals with poor driving records. This voluntary agreement is called: A: an assigned risk plan B: a high-risk plan C: an assessment plan D: a reinsurance agreement

A: an assigned risk plan Explanation: Assigned risk plans, or automobile insurance plans, are voluntary agreements between insurance companies license in a particular state. These companies agree to share the poor risks among themselves. Because these risks are randomly assigned to the participating companies, the are called assigned risks.

All of the following statements about Part A liability coverage are correct EXCEPT: A: damage to property owned and being transported by the insured is covered B: the supplementary payments section is automatically included for no additional premium C: The duty of the insurer to settle or defend ends when the limit of liability has been exhausted D: defense costs are paid in addition to the limit of insurance

A: damage to property owned and being transported by the insured is covered Explanation: Damage to property while it is being transported by the insured is specifically excluded in the liability section of the personal auto policy. Remember, liability insurance covers "the other guy", not the insured.

The term occupying includes all of the following EXCEPT: A: owning a vehicle B: being upon a vehicle C: being in a vehicle D: getting into, onto, out of, or off a vehicle

A: owning a vehicle Explanation: Occupying means in a vehicle, upon a vehicle, or getting into, onto, out of, or off a vehicle

Which of the following losses would be covered under Part B of the personal auto policy? A: Luke is driving to his cabin in the mountains when a deer runs in the front of his truck. Luke's windshield is broken on impact B: Nia is picking up the soccer team after a game. She accidentally closes the door to the van and crushes a child's finger. C: Olivia is reading a book in her car waiting for her class to start. A car races across the parking lot, sideswipes her car and doesn't stop. D: Liam fails to stop at a four-way intersection and causes an accident, injuring the driver of the other car

B: Nia is picking up the soccer team after a game. She accidentally closes the door to the van and crushes a child's finger. Explanation: Part B - Medical Payments Coverage covers reasonable expenses for necessary medical and funeral services incurred within three years of the date of injury, regardless of fault. Medical payments coverage is payable even if there is not a car accident. Coverage applies to the named insured, any family members, and any other person while occupying the named insured's covered auto. Nia would have coverage under Part B of her personal auto policy. Part A would pay for injuries to the party Liam injuries. Olivia was hit by an uninsured motorist (which includes hit-and-run-drivers) and is covered under Part C. Part D Physical Damage will cover repairs to Like's windshield.

All of the following statements about the term covered auto are correct EXCEPT: A: private passenger auto under 10,000 pounds and with 4 wheels are considered covered autos B: personal auto insurance follows the driver, not the vehicle C: any trailer owned by the named insured is considered a covered auto D: if a neighbor borrows your car with permission, your policy covers any at-fault damages up to the policy limit.

B: personal auto insurance follows the driver, not the vehicle Explanation: Insurance follows the vehicle, not the driver

Part D - coverage for damage to your auto covers all of the following EXCEPT: A: other than collision B: personal property in the vehicle C: direct and accidental loss to the covered auto D: collision

B: personal property in the vehicle Explanation: Part D does not cover any personal property in the vehicle

Which of the following would be covered under collision coverage? A: a tree fell on the vehicle B: the vehicle slid on ice and hit a tree C: a windshield was damaged in a hail storm D: colliding with a deer on the highway

B: the vehicle slid on ice and hit a tree Explanation: Collision is defined as the impact of an auto covered by the policy with another object or vehicle, or the upset (overturn) of a vehicle

heather decided that she wants to have a second car to drive in the in the winter. She buys a new car and automatically has the same auto coverage as her other car. How many days does Heather have to notify the insurance company if she wants her coverage on the new car to continue? A: 4 days B: 10 days C: 14 days D: 30 days

C: 14 days Explanation: in order for this coverage to continue, the insured must notify the insurance company within 14 days after becoming the owner.

Which of the following personal auto policy endorsements may be issued to someone who does not own a vehicle but drives rented autos? A: joint ownership coverage endorsement B: miscellaneous type vehicle endorsement C: named non-owner coverage endorsement D: Extended non-owner coverage endorsement

C: named non-owner coverage endorsement Explanation: The individual would have coverage while driving the company car under the company's auto policy, there would be no coverage for any other auto the insured might regularly or occasionally drive.

ABC Insurance Company and Mr. Smith, the insured, cannot argree on a claim settlement amount, so they each hire an appraiser. How does the dispute get resolved? A: the insured hires an addition impartial third party to mediate between the two appraisers. B: each appraiser seeks an independent appraisal and uses due process to determine the outcome C: the appraiser select an umpire and the decision of two out of the three is binding D: the appraisers presents their clients' cases in court and a judge renders a decision

C: the appraiser select an umpire and the decision of two out of the three is binding Explanation: Appraisal is an alternative method to resolve a dispute between the insurance company and the policyholder regarding the amount of a claim settlement. Each part hires an appraiser. In turn, the two appraisers select an umpire. The majority decision (two out of three) is binding.

The personal auto policy includes both property and liability coverages. Which of the following provides property coverage? A: Part C B: Part B C: Part A D: Part D

D: Part D Explanation: Part A - liability coverage Part B - medical payments coverage Part C - uninsured motorist coverage Part D - coverage for damage to your auto (physical damage

The personal auto policy uses the words you and your in the declarations. This is referring to: A: all resident licensed drivers B: the named insured, including a nonresident spose C: the named insured and resident relatives D: The named insured and resident spouse

D: The named insured and resident spouse Explanation: The policy uses the words you and your to refer to the named insured shown in the declarations and the named insured's spouse, if residing in the same household as the named insured.

Which statement regarding transportation expenses coverage is FALSE? A: if transportation is required due to the theft of an insured auto, a 48-hour waiting period is required before expenses will be paid B: coverage pays up to $20 per day and a maximum of $600 C: transportation expenses coverage includes rental cars, bus, train, and cab fares. D: a waiting period of 48 hours applies to all losses before transportation expenses are paid

D: a waiting period of 48 hours applies to all losses before transportation expenses are paid Explanation: The 48-hour waiting period only applies in the case of auto theft. For all other types of losses, the waiting period is 24 hours. In addition to collision and other than collision coverage, Part D provides transportation expenses coverage. This may include rental cars, bus fares, train fares, or cab fares. This coverage pays up to $20 per day, to a maximum of $600.

According to the out-of-state coverage provision in a personal auto policy, while temporarily driving in another state the insurer will pay: A: the lower amount of the insured liability policy limit or the state's minimum liability requirements B: the state minimum liability limits regardless of the insured liability policy limit C: the difference in amount between the insured liability policy limit or the state's minimum liability requirements D: the higher amount of the insured liability policy limit or the state's minimum liability requirements

D: the higher amount of the insured liability policy limit or the state's minimum liability requirements Explanation: While temporarily driving in another state, the insured's liability coverage will pay the higher of the insured liability policy limits or the other state's minimum liability requirements

Which of the following coverages pays the difference between the insured's actual damages for bodily injury and the amount of liability insurance that the insured could collect from the at-fault driver? A: medical payments to others coverage B: uninsured motorist coverage C: liability coverage D: underinsured motorist coverage

D: underinsured motorist coverage Explanation: With underinsured motorist coverage, the insurer will pay the additional amount needed to make up for the gap in insurance needs. For example, if the bodily injury caused by the insured was more than her limit of liability.