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Adjuster License > Automobile Insurance (commercial) 15% > Flashcards

Automobile Insurance (commercial) 15% Flashcards

1
Q

When might you need commercial auto insurance?

A

● If your business requires higher limits of liability
● If you have to carry heavy loads of tools and equipment or tow a trailer for work
● If you hire or own cars for employee use
● If you sell, repair, or provide parking for customer’s cars

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2
Q

most personal auto policies won’t cover

A

business related risks.

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3
Q

(BAP)

A

Basic Business Auto Policy

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4
Q

Basic Business Auto Policy (BAP)

A

Designed for most commercial auto owners

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5
Q

5 Sections to the BAP

A
  1. Covered Autos
  2. Liability Coverage
  3. Physical damage coverage
  4. Conditions
  5. Definitions
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6
Q

Section 1 of the BAP uses _______ symbols to indicate what vehicles are covered under each sort of coverage in the policy

A

Numeric

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7
Q

Symbol #1 BAP

A

Any auto: usually only liability

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8
Q

Symbol#2 BAP

A

Any owned vehicle

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9
Q

Symbol #3 BAP

A

Owned private passenger vehicle

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10
Q

Symbol #4 BAP

A

Owned vehicles other than passenger: trucks, buses, specialty

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11
Q

Symbol #5 BAP

A

Owned autos subject to no-fault insurance

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12
Q

Symbol#6 BAP

A

Owned autos subject to compulsory uninsured motorist law

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13
Q

Symbol#7 BAP

A

Specifically described autos

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14
Q

Symbol#8 BAP

A

-Hired autos

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15
Q

Symbol#9- BAP

A

Non-owned vehicles (provides liability coverage)

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16
Q

Symbol#19- BAP

A

Mobile equipment subject to compulsory auto financial responsibility requirements

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17
Q

Section 1 BAP

A

Covered Autos

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18
Q

Section 2 BAP

A

Liability Coverage

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19
Q

Section 3 BAP

A

Physical damage coverage

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20
Q

Section 4 BAP

A

Conditions

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21
Q

Section 5 BAP

A

Definitions

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22
Q

BAP Section II: Legal Liability

A

● The insured’s liability, up to policy limits
● Supplementary payments
● Defense costs of the insured, not subject to policy limit
“Insured” means:
● Named insureds
● Those operating covered vehicle with permission
● Anyone who becomes liable for conduct of insured

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23
Q

Section II Extensions

A

Supplementary Payments:
● All of insured’s expenses
● Up to $2,000 for bail bonds
● The cost of bonds (within the policy limit) to release attachments
$250/day for loss of earnings
● Court costs
● Any reasonable expenses incurred at the insurer’s request, including up to
● Interest that has accrued on the final judgment

These payments do not reduce the policy limit.

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24
Q

BAP Section II: Liability Exclusions
Liability does NOT cover:

A

● Bodily injury or property damage that the insured expected or intended
● Contractual liability (i.e. failure to perform as contracted)
● Anything that would be covered under workers’ compensation or employers
liability insurance
● Bodily injury caused by a fellow employee
● Damagetoproperty that is owned or transported by the insured or in the
insured’s care
● Covered autos used in or being prepared for a race, demolition contest, or
stunt

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25
Q

Liability does NOT cover bodily injury or property damage caused by:

A

● Handling property before it is transported by the covered auto or after it is
delivered
● Moving property with a mechanical device (other than a hand truck) that isn’t
attached to a covered auto
● Operating mobile equipment
● Workthat the insured completed or abandoned
● Theactual, alleged, or threatened discharge, dispersal, seepage, migration,
release, or escape of pollutants
● War

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26
Q

Section III: Physical Damage

Types of coverage…

A

Collision

Comprehensive

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27
Q

Collision:

A

collision with another car or object, overturn

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28
Q

Comprehensive:

A

other events, including hail, fire, glass breakage, collision
with falling objects, contact with animals, etc.

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29
Q

Section III: Physical Damage Specified Causes of Loss:

A

○ fire, lightning, or explosion
○ theft
○ windstorm, hail, or earthquake
○ flood
○ mischief or vandalism
○ sinking, burning, collision, or derailment of any conveyance transporting the covered auto

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30
Q

Section III Other Coverages

A

Towing and Labor

Transportation Expenses

Loss of Use

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31
Q

Towing and Labor:

A

pays expenses for towing and labor performed at the
scene of damage

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32
Q

Transportation Expenses:

A

pays up to $20/day ($600 total) for temporary
transportation expenses after theft of an auto

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33
Q

Loss of Use:

A

pays up to $20/day ($600 total) for the insured’s liability for the loss of use of an auto hired or rented without a driver

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34
Q

Physical Damage, Settlement is for

A

Actual Cash Value (ACV)

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35
Q

Limit of Insurance provision: if, after a loss, the insured gets a better car than they had before the loss, the amount of this “betterment” is

A

not covered

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36
Q

Physical Damage Exclusions:

A

● War & nuclear activity
● Wear & tear
● Freezing
● Mechanical or electrical breakdown
● Blowouts, punctures, etc.
● After market electronics

Necessary, factory-installed electronics are covered

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37
Q

Section IV: Conditions

A

Loss Conditions
And
General Conditions

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38
Q

Section IV: Loss Conditions

A

● Appraisal
● Duties in the event of a loss
● Legal action against the insurer
● Loss payment options for physical damage
● Subrogation

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39
Q

Section IV: General Conditions

A

● Bankruptcy
● Concealment, misrepresentation, and fraud will void the policy
● Liberalization
● No benefit to bailee
● Other insurance
● Premium audit
● Policy period and coverage territory (where geographically the policy is in force)
● When two or more coverages issued by the insurer apply to a claim

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40
Q

Other Insurance:

A

Policy condition that clarifies who pays what if two insurance
policies apply to the same loss

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41
Q

When the accident involves the insured’s own car, his insurance is

A

primary

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42
Q

When it involves a covered auto that the insured doesn’t own, the other insurance is

A

primary

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43
Q

BAP provides primary coverage for hired autos—unless

A

the auto comes with a
driver

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44
Q

If a BAP covers the same loss on the same basis as another policy, the two policies

A

split the cost

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45
Q

BAP Section V: Definitions

A
  • Auto
  • Pollution
  • Accident
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46
Q

Auto

A

passenger cars, trucks, buses and specialty vehicles
● Includes self-propelled vehicles that provide mobility to attached machinery or equipment
● Excludes mobile equipment: vehicles that are not designed for public roads and vehicles that provide mobility to permanently attached machinery or equipment, but are not self-propelled

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47
Q

Pollution:

A

clean-up of pollution from normal automotive fluids covered, spills of transported materials not covered

48
Q

Accident:

A

includes continuous or repeated exposure to the same condition that results in bodily injury or property damage

49
Q

BAP Endorsements Uninsured/Underinsured Motorist

A

Pays the insured when the person at fault for damages does not have the liability insurance to cover them

50
Q

BAP Endorsements, Named individuals broadened PIP

A

Extends the policy’s PIP coverage to include specific people, such as an employee who doesn’t have his own car

51
Q

BAP Endorsements, Medical Payments/PIP

A

● Adds coverage for medical injuries caused by accidents
● Includes the named insured and any relatives and household members

52
Q

BAP Endorsements, Individual Named Insured

A

● For individuals or sole proprietors who add personal autos to a BAP
● Extends coverage to insured’s family members and deletes some exclusions

53
Q

BAP Endorsements, Drive Other Car

A

Covers named people and their spouses for the use of cars that they do not own and are not covered under the BAP

54
Q

BAP Endorsements, Mobile Equipment

A

Adds coverage for mobile equipment

Taylor’s Landscaping has a compact track loader and a skid-steer loader that they use for larger jobs. These machines wouldn’t be covered under an unendorsed BAP, but can be added with Mobile Equipment.

55
Q

BAP Endorsements, Lessor- Additional Insured and Loss Payee

A

Covers designated leased autos and adds the leasing company as an insured for bodily injury and property damage

56
Q

Garage Policy, Why is this coverage needed?

A

What if your valet parking service crashes a guest’s car while parking it?
● It wouldn’t be covered by a BAP since you don’t own or hire the car
● It won’t be covered by a CGL since the customer wasn’t injured and no product
was defective
● Your business will still be held responsible

57
Q

Garage Policy

A

● Used mainly to cover auto dealers
● Combines the features of a Commercial General Liability policy and a Business
Auto policy
● Offers additional coverages, such as garage-keepers and physical damage

58
Q

What is garage-keepers coverage?

A

● General Liability excludes “items in care, custody, and control” of insured
● Garages and mechanics need protection when customers’ cars get damaged
● Garage-keepers: bailee coverage for damage to customers’ cars while they are in the insured’s care

59
Q

Bailee:

A

someone who holds another person’s property, usually for storage, repair, or transport

60
Q

Bailment:

A

the relationship between two people when one person’s goods are in the other’s care, custody, and control

61
Q

Bailee Coverage

A

prospects the bailee if he is held responsible for damage to the property he is holding

62
Q

Covered persons

A

insured, insured’s employees, and anyone who uses a covered auto with permission

63
Q

4 sections to the garage policy

A
  1. covered autos
  2. liability coverage
  3. garage keepers insurance
  4. physical damage
64
Q

Section 1 Garage policy

A

Covered autos

65
Q

section 2 garage policy

A

liability coverage

66
Q

section 3 garage policy

A

garage keepers insurance

67
Q

section 4

A

physical damage

68
Q

Section 1: Coverage Symbols Garage policy Symbol 21

A

any auto

69
Q

Section 1: Coverage Symbols Garage policy Symbol 22

A

Owned autos only

70
Q

Section 1: Coverage Symbols Garage policy Symbol 23

A

owned private passenger autos only

71
Q

Section 1: Coverage Symbols Garage policy Symbol 24

A

owned autos other than passenger autos only

72
Q

Section 1: Coverage Symbols Garage policy Symbol 25

A

owned autos subject to no fault benefits

73
Q

Section 1: Coverage Symbols Garage policy Symbol 26

A

owned autos subject to compulsory uninsured motorist laws

74
Q

Section 1: Coverage Symbols Garage policy Symbol 27

A

specifically described autos

75
Q

Section 1: Coverage Symbols Garage policy Symbol 28

A

hired autos only

76
Q

Section 1: Coverage Symbols Garage policy Symbol 29

A

non owned autos used in garage business

77
Q

Section 1: Coverage Symbols Garage keepers Symbol 30

A

autos left for service, repair, storage, and safekeeping (mandatory for grages)

78
Q

Section 1: Coverage Symbols Garage keepers Symbol 31

A

dealers autos

79
Q

Section II: Liability

A

Garage Operations- Other than Covered Autos

Garage Operations- Covered Autos

80
Q

Garage Operations- Other than Covered Autos

A

bodily injury and property damage arising out of the ownership, maintenance, or use of the business premises, but not covered autos

81
Q

Garage Operations- Covered Autos:

A

bodily injury, property damage, and covered pollution cost or expense arising out of the ownership, maintenance, or use of a covered auto

82
Q

Garage Liability Policy Exclusions:

A
  1. Watercraft or aircraft, unless on premises
  2. Workers’ comp injuries
  3. Pollution damage
  4. Product or work recalls
  5. Loss of use of property caused by delays or failures of the insured
  6. Real or personal property in insured’s care, custody, and control
83
Q

Section III: Garage-keepers Insurance

A

Garage-keepers insurance covers items (the customers’ autos) in the care, custody and control of the insured.

84
Q

Garage-keepers Coverage options:

A
  • legal liability
  • direct coverage, excess and/or primary
85
Q

Garage-keepers offers 3 forms of protection:

A
  • comprehensive
  • collision or overturn
  • specific causes of loss, including:
    ○ fire
    ○ lightning and explosions
    ○ theft
    ○ malicious mischief
    ○ vandalism
86
Q

Garage-keepers

A

Deductibles: per auto with a maximum per loss

87
Q

Per Auto Deductible $300
Per Loss Deductible $1,500

Premier Autos’ Garage-Keepers coverage
For example…

A

Drunk driver speeds through the parking lot and crashes into 7 cars
● Damagetoeach car: $700
● Damagetotal: $4,900
● Premier Autos will pay: $1,500 (maximum deductible per loss)
● Insurer will pay $3,400

88
Q

Exclusions to Garage-keepers coverage:

A

● Theft by insiders
● Contractual liability (may be covered in other section of policy)
● Defective parts or materials*
● Faulty work
● Aftermarket sound or radar equipment
● Acts of war, rebellion, etc.

89
Q

Section IV: Physical Damage

A

Like the BAP, but includes blanket limit on entire inventory

90
Q

Garage Policy: Endorsements

A

● Personal Injury Protection (PIP)
● Medical Payments
● Uninsured/Under-insured Motorist
● Drive Other Car Coverage
● False Pretense Coverage: covers the loss of cars when people steal them through a trick or scheme

91
Q

In2013, the Auto Dealers coverage form replaced the

A

Garage coverage form
○ very similar to the garage policy
○ clarifies some policy provisions
● Options for servicing businesses (mechanics, valets, car washes, etc.) who can’t get a garage policy anymore:
○ get a BAP and a CGL
○ add a garage-keepers endorsement if needed

92
Q

What about companies that deal with shipping and transportation?

A

Trucker’s Policy

93
Q

A professional trucking company:

A

● Owns many large, expensive autos
● Probably needs higher limits

94
Q

Truckers

A

Individuals or businesses who take possession of property for the purpose of transport

Note: the BAP normally excludes businesses that transport the goods of others!

95
Q

So, these types of companies need a Trucker’s policy:

A

● Adds several provisions to BAP coverage
● Meets the extra insurance needs of trucking industry

96
Q

The trucker’s policy will cover:

A

● A truck pulling an empty trailer
- A truck-tractor (a.k.a. a rig) with no trailer attached

(talking about semi trucks)

97
Q

3 sections to the trucker’s policy

A
  1. covered autos
  2. liability coverage
  3. physical damage coverage
98
Q

Section 1 of a truckers policy

A

Covered autos

99
Q

Section 2 of a truckers policy

A

liability coverage

100
Q

Section 3 of a truckers policy

A

Physical damage coverage

101
Q

Coverage Symbols Truckers policy 41

A

any auto

102
Q

Coverage Symbols Truckers policy 42

A

owned autos only

103
Q

Coverage Symbols Truckers policy 43

A

owned commercial autos only

104
Q

Coverage Symbols Truckers policy 44

A

owned autos subject to no fault benefits

105
Q

Coverage Symbols Truckers policy 45

A

owned autos subject to compulsory uninsured motorist laws

106
Q

Coverage Symbols Truckers policy 46

A

specifically described autos

107
Q

Coverage Symbols Truckers policy 47

A

hired autos only

108
Q

Coverage Symbols Truckers policy 48

A

non owned trailers under a trailer interchange agreement only

109
Q

Coverage Symbols Truckers policy 49

A

owned trailers not in your possession under a trailer interchange agreement only

110
Q

Coverage Symbols Truckers policy 50

A

non owned autos only

111
Q

Coverage Symbols Truckers policy 59

A

mobile equipment subject to compulsory auto financial responsibility or other motor vehicle insurance only

112
Q

Characteristics of the Trucker’s Policy Liability coverage:

A

includes people who hire out or lend their cars to the
insured for business purposes

113
Q

Characteristics of the Trucker’s Policy Trailer Interchange coverage:

A

covers damage to other people’s trailers in the
care of the insured for transport purposes

114
Q

Motor Carrier Policy

A

● Used as alternative to Trucker’s Policy
○ same as the Trucker’s Policy in most ways
○ uses Symbols: 61-71and79
● Unlike a trucker, a “Motor Carrier” may transport goods or passengers (taxis,
buses, limos, etc.)
● “Common Carrier”: offers transportation services on a regular basis

115
Q

Motor Carrier Act Before the Act was passed:

A

It was almost impossible for new motor carriers to join the industry because the federal government controlled prices and stifled competition.

116
Q

Solution: the Motor Carrier Act of 1980

A

● Deregulated the industry
● Lowered prices and improved the quality of service
● Established financial responsibility requirements

117
Q

Financial Responsibility Requirements of the Motor Carrier Act

A

● At least $750,000 for non-hazardous property
● At least $1,000,000 for oil or other hazardous material

The Endorsement for Motor Carrier Policies of Insurance of Public Liability (MCS-90 endorsement) helps insured comply with these requirements.

Adjuster License (11 decks)

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