Chapter 6 (Personal Auto Policy) Terms and test

Temporary substitute

Any auto or trailer that is non-owned while being used in place of an insured vehicle which not available because of breakdown, repair, servicing, loss, or destruction

Declared auto

Any vehicle shown in the Declarations

Each of the following is a Part A - Liability Coverage Supplementary payment, except:

B) Payment for all defense costs -Payment for all defense costs is part of the Part A - Liability Coverage Insuring Agreement, which also includes payment for bodily injury or property damage for which the insured is legally responsible.

Under the PAP, how long does an injured party have following an accident to report a Medical Payments claim?

C)3 years -The insurer will pay reasonable expenses incurred for necessary medical or funeral services incurred within 3 years of the date of the accident.

Supplementary payments under Part A of the Personal Auto Policy will pay which of the following?

D)$250 for bail bonds -Supplementary payments include bail bonds payments up to $250.

If an insurer non-renews an insured's policy for underwriting reasons, what is the minimum number of days' notice to the insured?

D)20 -At least 20 days' notice is required

Which of the following is not a duty of the insured if the insured's vehicle is damaged when it hit a tree?

D)Call the police -Calling the police is only a duty when seeking uninsured motorist coverage.

Part E

Duties after an accident or loss

Part F

General Provisions

Part A

Liability Coverage

Property Damage

Physical injury tom destruction of, or loss of use of tangible property

Business

Trade, profession, or occupation. The courts have determined that business activities have two components; they are continuous in nature and off the opportunity for profit.

Part C

Uninsured Motorist

Your Covered Auto

- Any vehicle shown in the declarations - A newly acquired auto - Any trailer that is the insured owns ◾Any auto or "trailer" the named insured doesn't own while being used as a temporary substitute for any other vehicle described in this definition, which is out of the normal use because of:◾Breakdown ◾Repair ◾Servicing ◾Loss ◾Destruction -A temporary substitute is NOT a "your covered auto" under Part D - Coverage for Damage to your Auto.

Comprehensive

-Flood damage -Earthquake -Theft

Collision

-Hitting a pothole -Driving into a ditch -Impact with a fixed structure such as a streetlight or a tree

All of the following are true about a newly acquired additional vehicle, except:

B)It can be used to transport goods for hire if receipts are less than $10,000 -Vehicles used to carry goods for hire cannot be insured under a Personal Auto Policy.

Part D

Coverage for damage to your auto

Coverage for recreational vehicles can be added to the Personal Auto Policy by the:

A)Miscellaneous Type Vehicle Endorsement -The Miscellaneous Type Vehicles coverage includes recreational vehicles.

Physical damage to the insured auto that is not covered under collision, and is not otherwise excluded, would be covered under:

D)Comprehensive The Other than Collision coverage, also known as Comprehensive, provides coverage for damages not caused by collision and not excluded in the exclusions.

Private Passenger Auto

Shall be deemed to the owned by a person if the auto is owned or leased under contract for a continuous period of at least 6 months

Coverages

-Loss of the insured's earnings (up to a specified limit) because of attendance at a trial -Bodily injury damage for which the insured is legally responsible -Defense costs incurred to defend or settle any suit or claim for damages -Property damage for which the insured is legally responsible

Exclusions

-Property damage or bodily injury intentionally caused by the insured -Bodily injury caused by the insured to an insured's employee during the course of employment -Damage caused while operating a motorcycle -Property damage to property owned by the insured

Trailer

A vehicle designed to be pulled by a private passenger auto or a pickup or van. Trailer also includes a farm wagon or farm implement while it's being towed by a private passenger auto pickup, or van.

Trailer

A vehicle designed to be pulled by a private passenger auto, pickup, or van

Newly acquired auto

A vehicle for which the insured becomes the owner during the policy period and may be a replacement or additional vehicle

Under Part D, Within how many days must an insured report the purchase of a new vehicle that is replacing an existing vehicle covered by collision coverage?

A) 14 -If a vehicle covered by Part D coverages is replaced by a new car with the same coverage, the policy will automatically extend coverage for 14 days.

A ____________vehicle is a covered vehicle when Your Covered Auto is being repaired due to a covered loss.

A) Temporary substitute -A temporary substitute is also covered if the vehicle is out of normal use due to breakdown, servicing, loss, or destruction.

Under a policy with limits of 25/50/10, what would be the insurer's liability arising out of a single accident where claimant A has injuries in the amount of $25,000; claimant B, $20,500; and claimant C $4,000?

A)$49,500 -The policy would pay up to the BI limit of $25,000 for A; $20,500 for B; and $4,000 for C. $25,000 + $20,500 + $4,000 = $49,500.

All of the following are excluded under Part A of the Personal Auto Policy, except:

A)A vehicle driven by an unlicensed driver If a covered driver is using the covered auto with permission, the driver is still covered even if not properly licensed.

A Personal Auto Policy is designed to cover:

A)An individual's or family's personal use of an auto -The Personal Auto Policy is designed for insuring individuals and families. A private passenger automobile used for business purposes is eligible, but commercial automobiles are not eligible.

Under Part A of the Personal Auto policy, which of the following would be covered?

A)Damage to a parked car -Liability coverage is not provided for: Damage to property owned, being transported, or in the care of the insured.

Which of the following vehicle uses is not excluded under Personal Auto Medical Payments?

A)Farm use Farm use is not listed as an exclusion as all other choices are.

S carries a Personal Auto Policy with Liability limits of 50/100/25. What is the maximum the policy will pay if S struck another vehicle causing injury to the occupants as follows: Driver - $70,000; Passenger 1-$30,000; Passenger 2-$50,000 and property damage to the other vehicle - $20,000?

B)$120,000 -Coverage is as follows: Driver - $50,000; Passenger 1 - $30,000; Passenger 2 - $20,000, since the policy will only pay $50,000 per person and a total of $100,000 per accident. The property damage is fully covered, totaling $120,000.

A Medical Payments claim will be paid by the insurer within how many months from the date of the occurrence?

B)36 -A Medical Payments claim will be paid within 3 years for reasonable expenses for medical and funeral expenses regardless of fault.

An uninsured motor vehicle is any of the following, except:

B)A company car -Besides a company car, a vehicle owned by the insured or a family member or a vehicle furnished or available for the regular use of the named insured or a family member is not considered an uninsured vehicle.

Which of the following vehicles is not considered an uninsured vehicle under Part C of the PAP?

B)A vehicle owned by the government Other vehicles that are not uninsured vehicles are company cars, self-insured, operate on rails or crawler treads, off-road vehicles, and those used as a residence.

Which of the following is covered under Part C - Uninsured Motorist Coverage?

B)Accident was caused by a hit-and-run driver -A hit-and-run vehicle can't be identified and is therefore considered uninsured.

Bodily Injury

Bodily harm, sickness, or disease, including death that results

A private passenger auto includes a leased vehicle as long as the lease contract is continuous for how many months duration?

C) 6 -A lease for less than 6 months is not considered a private passenger auto eligible for coverage under the Personal Auto Policy.

The limit of liability is the most paid by the insurer regardless of all of the following, except:

C)Amount of surcharges to be applied to policy -The amount of surcharge to be applied to the policy is not linked to the limit of liability.

Which of these statements is not true about Uninsured Motorist coverage?

C)Coverage is automatically provided for the damage to the insured vehicle -UIM insurance provides coverage for bodily injury only. Property damage would be covered by Part D of the owner's policy, or by Uninsured Motorist Property Damage, which is optionally available.

Which of the following claims would be covered by Collision Coverage under Part D of the Personal Auto Policy?

C)Damage to the insured auto's bumper when the auto crashed into a tree Part D of the policy specifically stipulates certain causes of loss that are not considered collision. They include missiles or falling objects, fire, theft, explosion, windstorm, contact with a bird or animal, among others.

Which of the following is covered under Part A of the Personal Auto Policy?

C)Injury to an employee while away from work -Liability is only excluded if the injury to an employee occurs in the course of employment.

Whose policy will be primary for bodily injury coverage for the injured party if a neighbor borrows an insured's car and injures a pedestrian?

C)The insured's auto policy -Auto coverage follows the vehicle. The insured owner's coverage is primary.

A leased auto is an eligible vehicle if the lease contract is for a continuous period of at least how many months?

D)6 A leased vehicle under a contract for a continuous period of at least 6 months by the insured is an eligible vehicle.

Under the Personal Auto Policy, medical payments do not apply to passengers occupying which of the following?

D)A van used in the insured's business in the course of employment -Workers' Compensation coverage is an exclusive remedy for injuries incurred in the course of employment. Therefore, these injuries are excluded under Medical Payments coverage.

The Personal Auto Policy would not provide coverage for which of the following?

D)A vehicle with fewer than four wheels -The PAP does not provide liability coverage for vehicles with less than four wheels or designed for off-road use, except under certain circumstances.

Which statement is false regarding uninsured motorist coverage under a Personal Auto Policy?

D)Coverage includes injuries suffered by someone using a covered vehicle without permission -Coverage does not apply when a person is using the vehicle without permission.

Occupying

Means in, upon, getting on, getting out, or getting off a vehicle.

Part B

Medical Payments

Family Member

a person related to the name insured by blood, marriage, or adoption who is a resident of the named insured's household. A family member includes a ward or foster child.

Newly Acquired Auto

◾A private passenger auto ◾A pickup or van, for which no other insurance policy provides coverage, if the auto:◾Has a gross vehicle weight of less than 10,000 pounds. ◾Is not used for delivery or transportation of goods and materials, unless such use is incidental to the insured's business of installing, maintaining, or repairing furnishings or equipment. For example, if the insured is a plumber; he may use his pickup or van for the transportation of his tools.

Under the PAP, Which of the following is not considered occupying an automobile?

A)Standing by the car exchanging insurance info Occupying means in or on a vehicle which includes getting in, getting out, and jumping off.

Which of the following is not a Supplementary Payment under Part A of the Personal Auto Policy?

B)Medical payments for an occupant of an insured vehicle -Medical payments are paid out of Part B of the policy and are not considered Supplementary Payments.

The insurer's limit of liability for a vehicle damaged by a loss under Part D is which of the following?

C)The lesser of actual cash value and replacement value

Insuring Agreement

The insurer will: ◾Pay damages for bodily injury or property damage for which any insured becomes legally responsible. ◾Settle or defend any claim or suit asking for such damages. ◾Pay all defense costs it incurs, in addition to the liability limits. The insurer's duty to settle or defend ends when the limit of liability is exhausted.

You and Your

The name insured listed in the declarations, and the spouse if a resident of the same household. The named insured should always be the person or persons to whom the vehicle is titled and registered, unless it is leased.

A temporary substitute vehicle is not a covered auto if used to substitute for which of the following?

B)Rental car -To be eligible for coverage, a temporary substitute vehicle may only be used in place of a vehicle described in the policy.

Which of the following is an insured's duty in the event of loss under the PAP?

D)Promptly notify the police in the event of a hit-and-run accident The insured must cooperate with the insurer, promptly notify the insurance company of a loss, and immediately send legal papers to the insurer.

Exclusion

-Theft of a radio not permanently installed in the vehicle -Replacement of bald tired due to wear and tear -Loss of a radar detection device

Which of the following uses of a vehicle is not excluded under the Medical Payments coverage?

B)Insured uses a truck for incidental purposes -Bodily injury sustained by an insured isn't covered if the insured is using a vehicle while engaged in business. However, a coverage giveback applies to private passenger autos, pickups, vans, and owned trailers used with such vehicles. This exclusion applies to the business use of trucks and other commercial vehicles.

A bird hits and breaks a windshield of an insured vehicle. This is covered under which of the following coverages of the PAP?

B)Other than collision -Coverage for collision with a bird or animal is provided under Other Than Collision coverage.

Comprehensive covers all of the following losses, except:

D)Rollover -Rollover and hitting another vehicle or object are covered by collision coverage.

Under the Personal Auto Policy, when the insured and the insurer do not agree on the recovery of damages or the amount recoverable by the insured, what system is used to resolve the disagreement?

B)Arbitration -The policy allows arbitration of a disagreement between the insurer and the insured as to whether that insured is legally entitled to recover damages, or as to the amount of damages recoverable.

Part E of the Personal Auto Policy states that after a loss the insured must:

B)Protect the auto from further damage In the event of a covered loss, Persons submitting claims to the insurance company are required to: Notify the insurer promptly about how, when, and where the accident or loss occurred; Cooperate with the investigation and settlement of any claim; Promptly send to the insurer any copies of notices or legal papers received; Submit to a physical exam as reasonably required by the insurer; Authorize the insurer to obtain copies of medical reports and other pertinent records; Submit a proof of loss when required by the insurer.

What is the purpose of the Extended Non-Owned Coverage for a Named Individual endorsement?

D)Covers non-owned vehicles furnished for the insured's regular use

Which statement is true of medical payments in a Personal Auto Policy?

D)Expenses for medical services sustained by the insured are covered -Coverage applies to any occupant of the insured vehicle and also to members of the insured's household as pedestrians when struck by a motor vehicle or as an occupant of another person's vehicle.

All of the following are correct regarding the Part A limit of liability under the Personal Auto Policy, except:

D)If the loss is covered under more than one Part of the policy, payment will be duplicated -The Part A limit of liability under the Personal Auto Policy makes clear the maximum amount of insurance that is available in various circumstances.

The Personal Auto Policy applies:

D)Only in the U.S., its territories, Canada, and Puerto Rico -Coverage does not extend to Mexico except on an excess basis with restrictions.

After an automobile policy has been in effect for 60 days, the insurer may cancel the policy for any of the following reasons, except:

D)Submission of four or more claims during a single policy period -Claims history is generally a valid reason for non-renewing a policy, not cancelling the policy mid-policy term.

Policyholder G wants her PAP to insure her sedan, primarily used for sales calls, her husband's SUV for car-pooling, the station wagon that their daughter uses to drive to school, and the van their son uses part-time to deliver dry-cleaning. Which of the following cars will G's agent tell her is not eligible?

D)The van While car-pooling and sales calls are acceptable business uses under the personal auto policy, business deliveries are not.

Automobile collision insurance under the Personal Auto Policy provides payment for losses:

D)To your car, regardless of liability Collision only applies to a vehicle of the insured and is applied regardless of fault.

The Personal Auto Policy provides coverage for collision losses to which of the following?

D)Your car, regardless of liability Collision only applies to a vehicle of the insured and is applied regardless of fault.