RMI3011 Chapter 20

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

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

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 of liability.

both I and II

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

both I and II

All of the following are considered to be a covered auto under the Personal Auto Policy EXCEPT

a motorcycle owned by the insured.

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

Covered expenses include the cost of funeral services.

Jenny purchased a Personal Auto Policy (PAP) that included property damage liability, collision coverage, medical payments coverage, and other-than-collision coverage. Jenny had too much alcohol to drink at a graduation party. While driving home from the party, Jenny ran off the road and hit a tree. Police responded to the accident, and Jenny was arrested for driving under the influence of alcohol. Which of the following statements is true regarding the damage to Jenny's car?

Damage to the car is covered under Jenny's collision coverage.

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. II. Admit fault if the insured believes he or she caused the collision.

I only

All of the following statements regarding "Part D: Coverage for Damage to Your Auto" under the Personal Auto Policy are true EXCEPT

Part D coverages only apply if the insured was not responsible for causing an accident.

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?

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

After you have been involved in an auto accident, you should do all of the following EXCEPT

admit fault if you believe you are at fault.

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?

medical payments coverage

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?

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

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

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

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?

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

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

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

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

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

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

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

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

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

Dennis was involved in an accident. He believes the damage to his auto is $7,000. 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?

appraisal provision

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

betterment

Uninsured motorists coverage under the Personal Auto Policy (PAP) pays for the bodily injury of an insured in all of the following situations EXCEPT:

bodily injury caused by a business vehicle

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?

bodily injury liability

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.

both I and II

Carl lost control of his vehicle on an icy road. His car slid off the road and hit a tree. The physical damage to Carl's vehicle will be covered under which of Carl's Personal Auto Policy (PAP) coverages?

collision coverage

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?

collision coverage

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

diminution

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

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

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

in Canada

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

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

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

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

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?

$90,000

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?

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

Helen carries liability limits of 50/100/25 under her Personal Auto Policy (PAP). Jason carries liability limits of 100/300/50 under his PAP. Jason borrowed Helen's auto with her permission. While driving Helen's car, Jason caused an accident in which the driver of the other car suffered bodily injuries totaling $80,000. How will this claim be settled?

Helen's insurer will pay $50,000 and Jason's insurer will pay $30,000.

Tony has an unendorsed Personal Auto Policy 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. II. A passenger on a motorcycle driven by Tony is injured when Tony hit another vehicle.

I only

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. II. They are payable even after the limit of liability is exhausted.

I only

Which of the following statements is (are) true with respect to the medical payments coverage of the Personal Auto Policy (PAP)? I. Medical payments benefits are paid regardless of fault. II. If the insured negligently injures another driver while operating the insured auto, injuries to the other driver are paid under the insured's medical payments coverage.

I only

Which of the following persons is (are) insured under the uninsured motorists coverage of the PAP? I. A pedestrian struck by a covered auto if he or she has no insurance to pay medical expenses II. The spouse of a named insured who is killed by an uninsured motorist

II only

Which of the following situations would be covered under the liability section of the PAP? I. A mechanic is sued by a pedestrian who is injured when the mechanic has an accident while road testing the insured's auto. 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.

II only

Which of the following statements about the Miscellaneous-Type Vehicle Endorsement to the PAP is (are) true? I. It provides bodily injury liability coverage for any vehicle rented by the insured. II. It can be added to PAP to insurance motorcycles and motor scooters.

II only

Which of the following statements concerning the collision damage waiver when renting an auto is true? I. It relieves the renter from legal liability to third parties arising out of operation of the rented car. II. It relieves the renter from legal liability for the vehicle if it is damaged or stolen.

II only

Which of the following statements is (are) true with respect to an unendorsed Personal Auto Policy (PAP)? I. Your PAP covers you while you are driving in Mexico. II. In addition to paying up to the limit of liability if the insured is negligent, the insurer also pays legal defense costs.

II only

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?

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

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?

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

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

No coverage is provided for newly-acquired vehicles.

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

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

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

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

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

Which of the following statements is (are) true with respect to the collision damage waiver on rented cars? I. It is inexpensive and is provided at no charge by most rental car companies. II. It waives the renter's liability for bodily injury liability arising out of use of the rented auto.

neither I nor II

Which statement concerning towing and labor coverage under the PAP is (are) true? I. There's no coverage for towing if the auto breaks down-towing is only covered if the auto needs to be towed after a collision has occurred. II. Towing and labor coverage pays for repairs at a service station or garage.

neither I nor II

Owen's car is insured under a Personal Auto Policy (PAP). A hail storm occurred one evening, and his car was severely damaged. Which PAP coverage, if Owen purchased it, would cover this damage to his auto?

other-than-collision

Randy was driving through a wooded area late at night when a deer ran in front of his car. Randy's car hit the deer, causing extensive damage to the car. Which of Randy's Personal Auto Policy (PAP) coverages will cover the damage to Randy's car?

other-than-collision loss coverage

The purpose of gap insurance is to

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

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?

property damage liability

All of the following are exclusions under the liability coverage of the Personal Auto Policy (PAP) EXCEPT

temporary substitute vehicles.

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

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

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

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

After the Personal Auto Policy has been in force for 60 days (or is a renewal policy), all of the following are grounds for the insurer to cancel the policy EXCEPT

the insured received a traffic ticket.

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

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.

If your covered auto is damaged in a collision, what is the insurer's liability for the damage under the Personal Auto Policy (PAP)?

the lesser of the actual cash value of the loss or the amount necessary to repair or replace the vehicle

Gary purchased a Personal Auto Policy (PAP) that included collision coverage. Gary lost control of his vehicle on an icy road. He slid across the center line into oncoming traffic. Another vehicle hit his car, causing severe damage to it. Ignoring any deductible, what is the insurer's liability for damage to Gary's car?

the lesser of the actual cash value or the amount necessary to repair or replace the vehicle

A vehicle is considered a constructive total loss when

the repair cost exceeds the actual cash value.

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

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

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

to provide liability coverage for an insured who operates a nonowned auto on a regular basis

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

underinsured motorists coverage.

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?

uninsured motorists