Auto Insurance (CH 6)

Question 1

Four potential coverages for Auto Insurance:

Answer 1

• Liability
• Medical Payments
• Uninsured/Underinsured motorist
• Physical Damage

only Liability is mandatory

Question 2

Financial Responsibility Law

Answer 2

Every driver must satisfy minimum financial responsibility requirements of:
$25,000 per person for bodily injury
$50,000 per occurrence for bodily injury liability
$25,000 per occurrence for property damage liability.

Question 3

Three Factors that define insurance premiums:

Answer 3

Base Rates- Charge for auto insurance set from classification tables based on age, gender, marital status, and territory, from statistical data provided to the state department of insurance.
Underwriting- Balance risk and premium to keep insurance company profitable. Driving records, claims history, credit scoring, and vehicle usage are included in this process.
Coverage- types and amounts of coverage. Liability is mandatory for state minimums and parts B, C, and D are optional.

Question 4

Declarations Page

Answer 4

Lists the named insured, mailing address and garaging location of the vehicle(s); the covered auto(s) insured; the policy limits; deductibles; and premium charged for each coverage and the policy period.

Question 5

Order of precedence in a case in which two parties may each have coverage that applies to one accident:

Answer 5

1. The owner’s policy is always primary

2. The driver’s policy, if any, is always excess

Question 6

Part A- Supplementary Payments

Answer 6

Bail Bonds- policy pays up to $250 for the cost of bails bonds required because of an accident. that results in PI or PD

Appeal bonds and Interest- Policy pays the premiums on appeal bonds and interest accrued.

Loss of Earnings- Insurer pays up to $200 per day for lost earnings if it requires the hearings of a trial.

Question 7

Part A- Liability exclusions

Answer 7

• Intentional Act
• Property damage to your own property in transit
• Auto business
• commercial business
• using a vehicle WITHOUT permission
• Racing and speed events

Question 8

Livery

Answer 8

hauling or driving people or things for a fee. This type of use is covered under a commercial lines policy and is excluded from personal auto insurance. This is meant to be covered by a business auto policy

Question 9

Out of state coverage

Answer 9

Coverage will automatically conform to the state laws of any state or U.S. territory, Puerto Rico, and Canada in which the insured happens to be driving or while the vehicle is being transported between any of those areas.

No coverage in Mexico or any other foreign country.

Question 10

Part B- Medical Payments

Answer 10

Medical payment coverage for insured and insured’s family.

Family members, guests in own auto or someone else’s auto and even as a pedestrian.

Question 11

Part C- Uninsured Motorist

Answer 11

Optional coverage designed to compensate the injured and guests in her car as for bodily injury as victims of an auto accident where the other driver is negligent and he has no liability insurance.

Question 12

Part D- Damage to your auto

Answer 12

Covers the insured’s vehicle for damage caused by a “collision” and/or “other than collision” if either or both coverages are purchased.

Question 13

Part E- Duties after an accident

Answer 13

Insured must notify the insurer as soon as possible after loss and must cooperate with an insurer’s investigation.

Question 14

Part F- General Provisions

Answer 14

This section defines the various legal and financial obligations relating to both the insurer and the insured.