Personal Auto Insurance
A major purpose of automobile insurance is to ensure that victims of automobile accidents are compensated for damage and injuries from those who cause accidents as a result of negligence. Which of the following is NOT an approach used to compensate accident victims? A) Fair Credit Reporting Act. B) No-fault. C) Financial responsibility. D) Unsatisfied judgment funds.
a
All of the following are excluded under collision or other than collision coverages EXCEPT: A) flood damage. B) damage to awnings, cabanas, or other equipment. C) road damage to tires. D) damage due to wear and tear.
a
Every state requires that each person be able to prove he is financially prepared if involved in an accident. Suppose your state requires minimum liability limits of 25/50/10. What is the name of that law? A) Financial responsibility law. B) Tort law. C) Compulsory insurance law. D) Unsatisfied judgment law.
a
If a dispute arises over whether an insured is entitled to uninsured motorists coverage, what process is used to settle the dispute? A) Arbitration. B) Appraisal. C) Negotiation. D) Subrogation.
a
In which of the following areas would PAP coverage typically NOT extend? A) Mexico. B) Puerto Rico. C) Canada. D) Hawaii.
a
Mary was involved in an accident with another driver. The car was damaged. Her insurance company reimburses her for the damage and seeks recovery from the negligent driver. What is this process called? A) Subrogation. B) Retention. C) Arbitration. D) Other insurance.
a
Medical payments coverage is Part B in the personal automobile policy. All of the following statements about medical payments coverage are true EXCEPT: A) if other auto medical insurance applies when driving an owned vehicle, this policy is excess. B) it does not cover bodily injury while using an insured vehicle as a residence. C) if other auto medical insurance applies when driving a nonowned vehicle, this policy is excess. D) amounts paid under this coverage are reduced by amounts paid for medical expenses under bodily injury or uninsured motorist coverages.
a
Personal auto liability insurance provides coverage in all of the following situations EXCEPT when: A) the insured uses the auto as a taxi. B) the insured accepts money for using the auto in a car pool. C) a relative living in the same household as the insured takes the auto without permission. D) the insured's 12-year-old child takes the auto for a joy ride.
a
Personal injury protection (PIP) is a form of no-fault auto insurance. All of the following characteristics of PIP are correct EXCEPT: A) it provides third-party coverage. B) it covers bodily injury from any occurrence without regard to fault. C) it provides first-party coverage. D) pain and suffering are not covered.
a
Roberta shares carpool expenses with co-workers. During her turn driving to work, she is involved in an accident in which one of her passengers is injured and her car is damaged. How does her personal auto policy respond? A) The insurance company will cover the auto repairs and injuries. B) The insurance company will not cover the auto repairs. C) The insurance company will not cover the auto repairs or injuries. D) The insurance company will only cover the auto repairs.
a
The insured rear-ends another vehicle that is stopped at a red light. The driver of the car struck by the insured is badly injured. The insured, his daughter and her friend were in the car and were also injured. Part B of the insured's personal auto policy will pay medical expenses for all of the following EXCEPT: A) the occupant of the car struck by the insured. B) the insured's daughter. C) the insured's daughter's friend. D) the insured.
a
Towing and labor coverage covers all the following EXCEPT: A) cost of a fan belt replaced at the scene of a breakdown. B) towing costs after a breakdown. C) labor for changing a tire at the scene of a breakdown. D) towing costs after an accident.
a
Which of the following damages is covered Under Part D-Coverage for Damage to the Insured's Auto? A) Flood. B) Wear and tear. C) Freezing. D) Mechanical breakdown not resulting from total theft.
a
Which one of the following would be considered a temporary substitute vehicle under the terms of the personal auto policy? A) Loaner vehicle provided by an auto repair shop. B) Truck borrowed from a friend while moving. C) New car purchased by the insured 3 days ago. D) Company car provided by an employer.
a
While backing her car into a parking space on a neighborhood street, Melanie struck a fire hydrant with her bumper. Which coverage under Melanie's personal auto policy (PAP) will cover the damage to the bumper? A) Collision. B) Liability. C) Medical payments. D) Comprehensive.
a
A personal auto policy provides coverage for all for the following drivers of an insured car EXCEPT: A) the insured's spouse. B) a thief who steals the car. C) the insured's child who attends school in another state. D) a neighbor who uses the car with the insured's permission.
b
An auto policy would provide coverage for an auto driven in all of the following places EXCEPT: A) Paducah, Kentucky. B) Mexico City, Mexico. C) Alberta, Canada. D) Honolulu, Hawaii.
b
Craig was driving his family in his owned station wagon on vacation in Wisconsin when a deer ran out in the road and collided with the front end of the wagon. Craig had the car towed to the nearest town, where the only car repair shop told him that it would take at least a week to get the parts to repair the engine. Craig's automobile policy provides coverage for transportation expenses. All of the following statements about transportation expenses are correct EXCEPT: A) there is a $20 per-day limit for expenses. B) coverage starts 48 hours after a car is damaged by an other than collision loss. C) no deductible applies. D) the maximum coverage is $600.
b
How much will the personal auto policy pay for a rental car if the insured vehicle is stolen? A) Nothing. B) $20 per day, up to $600 maximum. C) $30 per day, up to $900 maximum. D) $25 per day, up to $650 maximum.
b
Howard borrows his neighbor's car because his son took his car to college for a week while moving into the dorm. Under Howard's automobile policy, his neighbor's car is considered a (n): A) temporary substitute automobile. B) nonowned automobile. C) owned automobile. D) uninsured automobile.
b
If a California resident with a personal auto policy with the minimum liability limits has an accident in a state that requires higher limits, which of the following will occur? A) The policy will provide the higher limits, but the insured must first pay the additional premium. B) The policy will automatically provide the required higher limits at no extra charge. C) The loss is not covered. D) The insured must first purchase an other states coverage endorsement.
b
If a vehicle is insured for collision, this coverage waives the deductible. What is this coverage? A) Supplementary payments. B) UMPD. C) Other than collision. D) UIM.
b
If the insured hits a deer while driving his own vehicle, which part of the personal auto policy will pay to repair the vehicle? A) Collision. B) Other than collision. C) Liability. D) Medical payments.
b
Jane's sister, Maggie, who lives with Jane and just sold her car, drives Jane's sports car to a party. On the way home Maggie loses control of the car, hits a parked car, and rolls the car over. Maggie is severely injured and taken to the hospital. What coverage will reimburse Maggie for her medical bills? A) Liability coverage. B) Medical payments coverage. C) Bodily injury coverage. D) Uninsured motorist coverage.
b
Jane's sister, Maggie, who lives with Jane and just sold her car, drives Jane's sports car to a party. On the way home Maggie loses control of the car, hits a parked car, and rolls the car. Maggie dies as a result of her injuries. What coverage will reimburse Jane for Maggie's funeral expenses? A) Liability coverage. B) Medical payments coverage. C) Uninsured motorist coverage. D) No coverage is available for funeral expenses.
b
Mary was involved in an accident with a hit-and-run driver. The car was damaged. Mary is required to comply with all of the following duties EXCEPT: A) calling the police. B) following the hit-and-run driver to get a valid identification. C) permitting the insurer to inspect the damaged car. D) protecting the car against further damage.
b
Tammy was struck by a hit-and-run driver and suffered injuries to her neck. Which part of her personal auto policy, if any, will cover this loss? A) Her policy will not cover the loss; she must sue the other driver to recover these expenses. B) Her uninsured motorist coverage pays her medical bills. C) Her liability coverage pays her medical bills. D) Her collision coverage pays the medical bills.
b
The commercial auto policy offers physical damage coverage. One of the coverages is comprehensive. All of the following causes of loss are specifically covered under comprehensive EXCEPT: A) theft. B) freezing. C) earthquake. D) flood.
b
The insured has an auto policy with liability limits of 30/60/10. He negligently runs off the road and causes $70,000 damage to an apartment building. How much will the policy pay for the damage to the building? A) $70,000.00 B) $10,000.00 C) $25,000.00 D) $50,000.00
b
What is a no-stacking rule? A) Allows the insured to receive payment from only two insurance policies in the household. B) Prevents the insured or injured person from collecting medical payments from more than one policy or coverage, such as uninsured motorist. C) Allows the insured to waive the deductible under other than collision coverage. D) Prevents the insured from receiving full coverage from both collision and property damage.
b
Which of the following is considered a uninsured/underinsured motor vehicle? A) Car owned by the state insurance department. B) Car insured for less than the limits required by the state. C) Car furnished by an employer to an aunt living in the insured's household. D) A dune buggy used off-road.
b
While driving down the street, an insured swerves to avoid a pedestrian, goes over a curb, and damages a neighbor's fence. Which of the following will pay for the repairs to the fence? A) The driver's general liability policy. B) The driver's automobile policy under the property damage liability provisions. C) The driver's automobile policy under the collision provisions. D) The insured's homeowners policy.
b
While driving to work, Leonard is eating his breakfast, reviewing his appointment book, and talking on his cell phone. He runs a red light and collides with a commuter van. The van's occupants are hospitalized. Which part of Leonard's personal auto policy covers the occupants' injuries and damage to the van? A) Part B. B) Part A. C) Part C. D) Part D.
b
All of the following vehicles are eligible for coverage under the PAP EXCEPT: A) minivan with a 7,500 gross vehicle weight. B) private passenger auto. C) pickup with a gross vehicle weight of 15,000 pounds. D) four-wheel drive SUV.
c
An insured rents a car while on vacation in Canada and causes an accident. What coverage is provided for this loss under the personal auto policy? A) The loss is not covered. B) The loss is covered if the insured has purchased a rental car endorsement. C) The loss is covered under an unendorsed policy. D) The loss is covered if the insured has purchased a foreign country endorsement.
c
Bobby, age 16, borrows his parents' car without their permission and gets into an accident. Which of the following statements about coverage under the parents' personal auto policy is CORRECT? A) Bobby is covered by his parents' policy because he is included in the definition of named insured. B) Bobby is not covered for this accident because he used the car without permission. C) Bobby is covered by his parents' policy because he is a family member. D) Bobby is not covered because it was not his car.
c
In automobile insurance, the term supplementary payments refers to payments: A) made by the insured for damages exceeding the policy limits. B) received by the insured directly from the person or persons who caused the loss. C) covering reasonable expenses incurred at the insurer's request and other specified expenses that are not subject to the policy limit. D) made by the insurance company for the insured's own medical expenses to supplement any other medical insurance.
c
Jim borrows a company van to take his son to college. As the trip takes more than 10 hours, he would like to share the drive with Julia, his wife. What endorsement should Jim add to the company commercial auto policy to make sure he has the proper coverage? A) Drive other car coverage. B) Employees as insureds. C) Individual named insured. D) Additional insured.
c
Jonathon and Mary have two sons. Steve lives at home and the other son, Stan, lives in an apartment across town. Jonathon wants to buy a car for Stan so he can get a job after his college classes. Jonathon titles the car in both his name and Stan's name and wants to add the car to his automobile policy. Which endorsement will provide this coverage? A) Extended nonowned coverage for named individual. B) Drive other car. C) Joint ownership coverage. D) Miscellaneous type vehicle.
c
Mary was involved in an accident with a hit-and-run driver. Her car was damaged. Which of the following items would be covered under the collision coverage in the personal auto policy? A) The vehicle is stolen before the tow truck can tow it to the body shop. B) Mary's luggage in the trunk is destroyed. C) The front windshield is shattered. D) The vehicle is towed to the body shop.
c
Mr. Jones has an auto policy with Coverage A limits of 15/30/10. He also has a $250 deductible for collisions. He runs a red light at an intersection and collides with Mrs. James' car. Mrs. James is awarded $30,000 for her injuries and $6,000 for the damage to her car. Mr. Jones' car sustains $750 in damage. How much will Mr. Jones' policy pay for this incident? A) $21,750.00 B) $36,500.00 C) $21,500.00 D) $36,750.00
c
Physical damage losses under the personal auto policy are reimbursed on what basis? A) Functional replacement cost. B) Actual cash value or cost to repair or replace, whichever is greater. C) Actual cash value or cost to repair or replace, whichever is less. D) Market value.
c
The covered auto is defined in the policy as all of the following EXCEPT: A) any auto shown in the declarations. B) any trailer owned by the insured or spouse. C) any additional auto acquired in the past 30 days. D) any auto used as a temporary substitute while an insured auto is being repaired.
c
The law that provides that each party must accept responsibility for his own losses and must recover losses from his own insurer is the: A) self-coverage law. B) fault law. C) no-fault law. D) tort law.
c
Under the medical payments coverage of a personal auto policy, the insurer pays for medical expenses and funeral services incurred within how many years from the date of an accident? A) Five. B) Two. C) Three. D) One.
c
Which one of the following auto policy coverages would pay for damage to the insured's car that the insured motorist caused by hitting a farmer's cattle while driving through the country? A) Uninsured Motorists. B) Liability. C) Other than Collision. D) Collision.
c
Which one of the following would NOT be paid as supplementary payments under Part A of a personal auto policy? A) Interest accruing after a judgment is entered which was defended by the insurer. B) The insured's lost earnings up to $200 per day because of court appearances. C) Funeral expenses for the insured. D) Expenses the insurer incurs in investigating claims.
c
While driving to work one morning, Jessica is hit from behind by a car driven by Sam. Jessica is injured and taken to the hospital where she is admitted with a broken shoulder and other internal injuries. During the police investigation, it is determined that Sam was 100% negligent and did not have automobile insurance. What coverage will indemnify Jessica for her injuries? A) The state's unsatisfied judgment coverage. B) Jessica's bodily injury liability coverage. C) Jessica's uninsured motorist bodily injury coverage. D) Sam's uninsured motorist bodily injury coverage.
c
All of the following vehicles can be insured under an unendorsed personal auto policy EXCEPT: A) rental cars. B) newly acquired vehicles. C) trailers hitched to the insured vehicle. D) motorcycles.
d
Automobile comprehensive coverage insures all of the following perils EXCEPT A) fire. B) theft. C) glass breakage. D) collision.
d
Cecil sells his car and buys another one to replace it. How does the liability coverage in his personal auto policy apply to the replacement vehicle? A) It is not covered; Cecil must cancel the existing policy and purchase a new one for the replacement vehicle. B) It is not covered until Cecil notifies the insurance company. C) It is automatically covered for 14 days, but Cecil must notify the insurer for coverage to continue beyond that point. D) It is automatically covered.
d
Comprehensive coverage pays for all of the following damages EXCEPT: A) explosion. B) hitting a deer. C) glass breakage. D) overturning of the auto.
d
Depending on the circumstances, a passenger injured in an automobile accident may be able to recover under all of the following coverages EXCEPT: A) uninsured motorist. B) medical payments. C) liability. D) collision.
d
Howard borrows his neighbor's car because his car is in the body shop after his oldest son had an accident on a trip home from college. Under Howard's automobile policy, his neighbor's car is considered a (n): A) uninsured automobile. B) nonowned automobile. C) owned automobile. D) temporary substitute automobile.
d
Howard bought a car yesterday for his youngest son to drive to school and his job. Under Howard's automobile policy, this car is considered a (n): A) temporary substitute automobile. B) uninsured automobile. C) nonowned automobile. D) owned automobile.
d
Jane insures her car with ABC Insurers. Which of the following individuals best describes a family member on Jane's policy? A) Robert, her ex-husband who moved out last week. B) Uncle Joe visiting from Texas. C) Renee, a friend, who lives with Jane. D) Maggie, her older sister, who lives with Jane.
d
Part A of the personal auto policy would apply in which of the following situations? A) Garage mechanic while test-driving the insured's auto. B) Driver using the insured vehicle to transport people for a fee. C) Driver who intentionally causes an accident. D) Insured's 13-year-old son who, while playing with the car, starts it and lets it roll into the street, damaging other parked cars.
d
Richard and his wife own two family cars. In addition, Richard is given a company car to makes sales calls. He occasionally uses the company car for personal use and is concerned that he may not have sufficient company coverage. Which of the following is the best advice his agent can give him? A) Richard can add the company car to his automobile policy as car number 3. B) Richard can add the drive other car endorsement to his policy. C) Richard has to rely on the coverage his company gives him and follow their usage rules. D) Richard can add the extended nonowned coverage for named individual endorsement to his policy.
d
Steve meets with his agent to apply for an automobile insurance policy on his 2 personal cars. In reviewing the policy, Steve finds he is not willing to accept the duties listed in the conditions section. He signs the application but adds a note deleting the duties to the insurer. Is this acceptable to the company? A) No, the agent has to make this request in writing. B) Yes, the insured has the ability to change the policy at the time of the application. C) Yes, as long as the request is done in writing. D) No, a written endorsement by the insurer is the only way to change the policy.
d
The Personal Auto Policy (PAP) has territorial limits that include: A) Mexico City, Mexico. B) Western Europe. C) London, England. D) Montreal, Canada and Puerto Rico.
d
The personal auto policy coverage applies to losses, accidents, or occurrences that take place during the policy period in all the following locations EXCEPT: A) Alberta, Canada. B) Dover, Delaware. C) San Juan, Puerto Rico. D) Phillipsburg, St. Martin.
d
Two personal auto policies cover one vehicle. Company A's limit of liability is $100,000 and Company B's limit of liability is $300,000. How much will Company A pay for a liability loss in the event of an accident when the damages total $100,000? A) $100,000.00 B) $50,000.00 C) $75,000.00 D) $25,000.00
d
Under an auto policy, Other than Collision coverage would apply to which of the following situations? A) The car rolls over after hitting a patch of ice. B) An insured breaks a window to gain access because the keys were left inside. C) An insured has her car parked at an airport, and a suitcase is stolen from the car. D) All of the car's tires are stolen.
d
What part of the personal auto policy covers losses caused by malicious mischief, vandalism, hail, or floods? A) Liability. B) Property damage. C) Collision. D) Other Than Collision.
d
What type of endorsement would be used to insure a recreational vehicle under the personal auto policy? A) Extended vehicle endorsement. B) Motor home endorsement. C) Joint ownership coverage. D) Miscellaneous type vehicle endorsement.
d
Which of the following is NOT one of the requirements for a loss to be paid under the uninsured motorists coverage of the personal auto policy? A) Other vehicle meets policy's definition of uninsured vehicle. B) Insured is legally entitled to damages. C) Loss is sustained by an insured. D) Loss involves property damage to insured's auto.
d
Which one of the following principles is used to describe liability resulting from the negligence of a person who uses an auto with the insured's permission? A) Strict liability. B) Absolute liability. C) Implied liability. D) Vicarious liability.
d