Chapter 16 Flashcards
Greg is a truck driver with Home Furnishings, Inc., and delivers furniture to customers. Jeff is a salesman with Home Furnishings and accompanies Greg on a delivery run to an important customer. On the way Greg runs a red light, hits a bus, and rolls the delivery truck. Jeff is seriously injured. Which coverage under the unendorsed commercial auto policy will pay for Jeff’s injuries?
A) Bodily injury liability.
B) Uninsured motorist.
C) Medical payments.
D) No coverage is available under the commercial auto policy for this loss.
Answer: D
The commercial auto policy includes only liability and physical damage coverage. Medical payments can be added by endorsement. Bodily injury to any fellow employee of the insured arising out of and in the course of the fellow employee’s employment is excluded under bodily injury liability. Jeff should pursue a workers’ compensation claim.
Patrick’s Widget Company has a small fleet of owned cars used by local salespeople. Most of the salespeople, however, travel to other cities and rent cars to make sales calls. Which coverage should Patrick include on his commercial auto policy to cover this exposure?
A) Symbol 8–Hired autos.
B) Symbol 9–Nonowned autos.
C) Symbol 7–Specifically described autos only.
D) No coverage is available for rental cars under the commercial auto policy.
Answer: A
Symbol 8 applies to autos the insured leases, hires, rents, or borrows but not to autos the insured’s employees own.
Which of the following is NOT an exclusion in the commercial auto policy liability section?
A) Completed operations.
B) Contractual liability.
C) Care, custody, and control.
D) Bail bonds.
Answer: D
A coverage extension in the commercial auto policy allows up to $2,000 for bail bonds as a supplementary payment. It also pays for the cost of bonds to release attachments in any suit the insurer defends.
The business auto coverage form uses symbols to denote the vehicles to which each of the policy’s coverages applies. Which symbol is the most restrictive?
A) Symbol 2.
B) Symbol 9.
C) Symbol 7.
D) Symbol 1.
Answer: C
Symbol 7 is the most restrictive because it applies only to autos specifically listed in the policy. Symbol 1 is the least restrictive as it covers any auto. Symbol 2 covers owned autos only. Symbol 9 covers nonowned autos, those owned by employees or partners of the insured.
Which business auto coverage symbol allows coverage of all vehicles, including owned, nonowned, and hired autos?
A) Symbol 8.
B) Symbol 1.
C) Symbol 3.
D) Symbol 4.
Answer: B
Symbol 1 affords the broadest coverage. It applies to any auto the insured will use during the policy period, including autos that are owned, leased, hired, rented, or borrowed. However, Symbol 1 can be used only for liability coverage. Symbol 3 covers owned private passenger autos. Symbol 4 covers owned autos other than private passenger autos. Symbol 8 covers hired, leased, rented, or borrowed autos.
Which one of the following is NOT a use of auto symbols in the commercial auto policy?
A) To identify which coverage applies to which vehicle.
B) To customize the policy to the insured’s needs by selecting the appropriate coverage.
C) To determine how coverage will apply to vehicles acquired after the policy effective date.
D) To determine which rating territory applies to the covered autos.
Answer: D
The BAP uses a system of nine covered auto symbols to denote the vehicles to which each of the policy’s coverages applies. Though there is some use of the auto symbols in policy rating, territory determination is not one of them.
Symbol 4 of the Business Auto policy applies to only those autos owned by the business:
A) that are over 50 ton.
B) that are not private passenger autos.
C) that are over one ton.
D) that are specified in the policy.
Answer: B
Symbol 4 refers to a category of autos that are owned by the insured but are not private passenger vehicles.
When an employer has employees use their own autos in connection with the employer’s business, the employer should purchase:
A) hired auto liability.
B) extended employee liability.
C) third-party auto liability.
D) nonowned auto liability.
Answer: D
Under a business auto policy, a nonowned auto represented by Symbol 9 is any auto owned by an employee or partner while used in the insured’s business or personal affairs.
The liability coverage in the business auto coverage form covers all of the following EXCEPT:
A) bodily injury suffered by others as a result of the insured driving a covered auto.
B) damage to property of others as a result of an accident involving a covered auto.
C) expenses to settle claims for losses due to an accident.
D) damage to the covered auto.
Answer: D
Liability coverage covers bodily injury or property damage to others resulting from the ownership, maintenance, or use of a covered auto. It also covers expenses to defend the insured, and to investigate and settle claims. Damage to a covered auto would be covered under the policy’s physical damage coverage.
Fred operates a delivery service. One day while a customer was directing Fred as he backed his delivery van up to the customer’s loading dock, Fred accidentally hit a parked car. The owner of the car filed a claim against both Fred and the customer. Fred’s business auto policy will do which of the following?
A) Defend the customer but deny coverage for Fred because he wasn’t liable.
B) Not defend Fred or the customer because the loss occurred on the customer’s premises.
C) Defend both Fred and the customer up to the policy limits.
D) Defend Fred but deny coverage for the customer who needs his own policy.
Answer: C
Insureds under the business auto policy are the named insured for any covered auto; anyone else while using, with permission, a covered auto the insured owns, hires, or borrows; and anyone else who otherwise is not excluded and who is liable for the conduct of an insured. Both Fred and the customer will be defended.
The garage program excludes coverage for auto service risks. All of the following are considered auto service risks EXCEPT:
A) public parking lots.
B) repair shops.
C) car dealers.
D) service stations.
Answer: C
The garage policy covers auto dealerships in the business of selling autos, trucks, motorcycles, or other vehicles. Repair shops, service stations, storage garages, public parking places, franchised and nonfranchised trailer dealers, and tow truck operators are considered service operations and excluded under the garage policy.
The garage policy covers all of the following EXCEPT:
A) insured’s medical bills.
B) insured’s premises and operations.
C) insured’s products and completed operations.
D) insured’s automobile liability.
Answer: A
The garage policy is a package policy and includes coverage for both general liability as well as auto exposures. The health expenses of the insured are not covered.
The garage coverage form is designed specifically for all of the following EXCEPT:
A) repair shop on the dealers lot
B) rental car companies
C) auto dealers
D) truck dealers
Answer: B
The garage coverage form is designed specifically for vehicle dealers, including dealers that have repair operations on the business premises.
Which one of the following commercial auto coverages covers automobiles in the insured’s care?
A) Garagekeepers.
B) Business auto.
C) Liability.
D) Comprehensive.
Answer: A
Garagekeepers insurance covers customers’ automobiles while in the care of the insured. Garagekeepers coverage is a special type of insurance necessary because the auto is entrusted to the business.
After business hours, someone breaks into the insured’s lot behind his car dealership and steals a customer’s auto. Which of the following coverages would apply to this loss?
A) Liability coverage in the garage coverage form.
B) Liability coverage in the business auto coverage form.
C) Premises-operations coverage in the commercial general liability coverage form.
D) Garagekeepers coverage in the garage coverage form.
Answer: D
The liability coverage in the garage coverage form excludes damage to property of others in the insured’s care, custody, or control. This coverage is provided by the form’s garagekeepers coverage. This type of loss would not be covered under the business auto or commercial general liability forms.
