Chapter 14

Mobile Equipment subject to financial responsibility would be symbol: A - Nineteen B - Five C - Nine D - Six

(Rationale - Mobile equipment that is subject to registration and licensing is Symbol 19.)

Coverage not included in a business auto policy would be: A - BI and PD B - UMBI C - Specified causes D - Physical damage

(Rationale - Uninsured motorist and medical payments must be endorsed to the policy.)

Within a BAP, which auto symbol applies to mobile equipment? A - 19 B - 2 C - 6 D - 4

A - 19 (Rationale - This symbol only applies to land vehicles that are considered mobile equipment under the policy's mobile equipment definition. The symbol was just introduced in the 03 06 edition of the Business Auto Policy. It allows extension of BAP coverage for vehicles in states that confer vehicle status by making certain types of self-powered equipment subject to registration/licensing law.)

Garage liability is broader than business auto liability because: A - It covers CGL and auto B - Garage covers CGL only C - Business auto is broader D - There is no difference

A - It covers CGL and auto (Rationale - Garage liability combines CGL and business auto together.)

All of the following are considered a Specified Cause of Loss under the Business Auto Policy EXCEPT: A - Earthquake B - Mechanical Breakdown C - Derailment while being transported D - Vandalism

B - Mechanical Breakdown (Rationale - Mechanical Breakdown is not one of the Specified Causes of Loss.)

Drive other car endorsements on a Business auto may be used to cover: A - vehicle use by spouse B - business trip rentals C - non-business exposures D - employees cars

C - non-business exposures (Rationale - Drive other car extends coverage to personal use of vehicles.)

Which is incorrect concerning the truckers form? A -Must haul for hire B - Similar to the BAP C - Covers big rigs D - All are incorrect

D - All are incorrect (Rationale - This is the incorrect answer because all of the choices are true.)

Which of the following statements is FALSE about the Motor Carrier Act of 1980? A - It states federal regulations regarding the minimum financial responsibility limits for carriers of hazardous and non-hazardous property. B - This act states that the minimum financial responsibility for carriers of radioactive materials is $5 million. C - All interstate common carriers must have a certificate of insurance filed with the Interstate Commerce Commission showing proof of insurance. D - This act makes purchasing an insurance policy a requirement for anyone transporting hazardous materials.

D - This act makes purchasing an insurance policy a requirement for anyone transporting hazardous materials. (Rationale - The minimum financial responsibility laws may be satisfied by purchasing of a bond instead of an insurance policy.)

An owner of an auto repair business would be best covered under which of the following? A - A Business Auto policy with Non-Owned Autos as a specified symbol. B - A Garage Liability Coverage form. C - A Commercial Property coverage form. D - A Commercial General Liability form.

B - A Garage Liability Coverage form. (Rationale - The Garage Coverage form is specifically designed for a business with temporary care, custody, or control of customer vehicles.)

Garage Operations refers to: A - The sale of auto parts. B - Ownership, maintenance, or use of a garage premises and autos in the insured`s care. C - The repairs completed on vehicles in the insured`s care, custody, or control. D - The liability exposure of an insured who has customers entering and exiting the property at various times.

B - Ownership, maintenance, or use of a garage premises and autos in the insured`s care. (Rationale - Operations can mean the liability exposure of an owned premises, the repairs and use of customer vehicles, as well as the sale of parts at an insured premises.)

The four major exposures to an auto-related business owner that are covered on a Garage plan are: A - Premises Operations, Completed Operations, Product Liability, and Professional Liability B - Premises Operations, Completed Operations, Product, and Auto Liability C - Auto Liability, Products & Completed Operations, Liability, and Workers Compensation D - Liability, Property, Auto, and Workers Compensation

B - Premises Operations, Completed Operations, Product, and Auto Liability (Rationale - These 4 areas are covered only on the Garage Coverage form.)

Under Truckers Coverage the definition for a trucker is: A - is someone in the business of transporting the property of others by vehicle (auto or truck) for no fee. B - is someone in the business of transporting the property of others by vehicle (auto or truck) for a fee. C - someone who covers autos and trucks kept by the insured in their care, custody, or control. D - $1 million for oil and other hazardous wastes

B - is someone in the business of transporting the property of others by vehicle (auto or truck) for a fee. (Rationale - The definition of a Trucker for this coverage form is someone in the business of transporting the property of others by vehicle (auto or truck) for a fee.)

What would be needed if a business owner had no personally owned vehicles, but wanted insurance on a rental car he personally rented on vacation? A - A Non-Owner policy B - A Rental Car Endorsement C - A Drive Other Car Endorsement D - A Business Auto Policy is all that is needed.

C - A Drive Other Car Endorsement (Rationale - A Drive Other Car endorsement is needed because the insured requires coverage as an individual. The BAP would not provide coverage for this loss.)

Which of the following is NOT a Specified Cause of Loss? A - Flood B - Fire C - Aircraft D - Explosion

C - Aircraft (Rationale - Remember, a company called VMM FLEW THE DC(10) By SF!)

Which symbol(s) covers the exposure of employer's non-ownership liability? A - Symbol #2 and #4 B - Symbol #4 C - Symbols #8 and #9 D - Symbol #8

C - Symbols #8 and #9 (Rationale - Symbol #8 is for hired autos and Symbol #9 is for non-owned autos.)

The Motor Carrier Act of 1980 states that a trucker must file proof of financial responsibility in order to meet the bodily injury and property damage minimum requirements for third party claims. Which of the following requirement is false? A - $5 million for poisonous gasses B - $1 million for oil and other hazardous wastes C - $5 million for radioactive materials D - $5 million for oil an other hazardous wastes

D - $5 million for oil an other hazardous wastes (Rationale - $750,000 (non-hazardous materials) $1,000,000 (oil and other hazardous wastes) $5,000,000 (explosives, poisonous gasses or radioactive materials))

This coverage applies only when the insured is found legally liable for the damage to a customer's vehicle: A - Garagekeeper Direct Coverage Primary B - Garagekeepers Causes of Loss C - Garagekeeper Direct Coverage Excess D - Garagekeepers Legal Liability

D - Garagekeepers Legal Liability (Rationale - This coverage applies only when the insured is found legally liable for the damage to a customer's vehicle. For instance, if an employee test-drove a repaired customer vehicle and hit a fence, the insured is at fault and the policy would pay.)

Newly acquired vehicles are not automatically covered under which symbol? A - Three B - None of these C - Five D - Seven

D - Seven (Rationale - Symbol #7 is for Specifically Described Autos only, no automatic coverage.)

Which one of the following would be insured under a Business Auto Policy? A - Customer who borrowed a company car with permission B - Employee owned auto C - Auto owned by a partner D - Hired owned auto

A - Customer who borrowed a company car with permission (Rationale - The Named Insured is any party causing a loss while acting on behalf of the insured and anyone having the named insured's permission except: Hired auto owner, Employee-owned auto, Anyone in the auto business, People loading/unloading car (other than named insured employees), Auto owned by partner or member)

Which is not included in a Business Auto physical damage coverage? A - Property damage liability B - Transportation expense C - Vandalism D - Specified causes

A - Property damage liability (Rationale - Property damage liability is not a physical damage coverage. It is liability coverage.)

The Truckers Coverage form is most similar to what other form of coverage? A - The Non-Owner Personal Auto Policy B - The Garage Coverage form C - The Business Auto Policy D - The Motor Truck Cargo Coverage form

A - The Non-Owner Personal Auto Policy (Rationale - Truckers Coverage is similar to the Non-Owner Personal Auto policy in that it covers vehicles not owned by the insured.)

A business auto is defined as all of the following except: A - Private passenger auto B - Golf cart used for business owned by the named insured C - Truck D - Trailer owned by the named insured

B - Golf cart used for business owned by the named insured (Rationale - The Business Auto is defined as a private passenger auto, truck, or trailer owned by the named insured or used in connection with the business, and only as defined in the declarations page.)

All of the following are common exclusions on the BAP, EXCEPT: A - Premises and Completed Operations B - Trailers the insured leases for business use. C - Pollution Liability D - Property of Others

B - Trailers the insured leases for business use. (Rationale - Liability coverage for a trailer always follows the limit of insurance on the vehicle that pulls it.)

Physical Damage cover applies to all the symbols, except: A - Neither Symbol #1 or #9 B - Symbol #9 C - Symbol #1 D - Both Symbol #1 and #9

D - Both Symbol #1 and #9 (Rationale - Both Symbol #1 and #9 apply to liability only)

Trailer interchange coverage applies to which commercial auto form(s)? A - Motor Carrier form B - All of the forms C - Truckers form D - Both truckers form and moter carrier form

D - Both truckers form and moter carrier form (Rationale - Trailer interchange coverage applies to both the truckers and motor carrier form.)

A parking garage would be BEST insured under which form(s): A - None of the above would adequately cover the exposures for this type of business. B - Garagekeepers Direct Coverage (Excess) C - Garagekeepers Legal Liability D - Garagekeepers Direct Coverage (Primary)

D - Garagekeepers Direct Coverage (Primary) (Rationale - Remember, the most correct answer is B, because it provides coverage whether or not the insured is legally liable, and it will pay before the customer`s own policy pays.)

Which one of the following is not a major exposure to a business owner of an auto related facility? A - Product Liability B - Completed Operations C - Auto Liability D - Professional liability

D - Professional liability (Rationale - Premises Operations, Product Liability, Completed Operations, Auto Liability.)

Which of the following symbols used on a business auto policy offers the broadest coverage? A - Symbols 8 & 9 together B - Symbol 7 C - Symbol 2 D - Symbol 1

D - Symbol 1 (Rationale - Symbol 1 represents any auto the insured owns (#2), specifically described autos (#7) and hired and non-owned autos (#8 & 9).)

This coverage form that extends liability and physical damage to vehicles and trailers on a primary basis is named ___________. A - Truckers Coverage Form B - Business Auto Policy C - Motor Carriers Act D - Trailer Interchange coverage

D - Trailer Interchange coverage (Rationale - This coverage form extends Liability and Physical Damage to these vehicles and trailers on a primary basis. This is referred to as Trailer Interchange coverage.)