Chapter 22 - Auto Insurance Flashcards
Define Appraisal Provision
(clause) Used when the insured and the insurer agree that the loss is covered, but the amount of the loss is in dispute. The appraisal can be demanded by either party.
Define Betterment
The increase in value of the auto not payed by the insurer after a car’s value goes up after a repair.
Define Cancellation.
When the insured or insurer cancels a policy.
Define Collision Loss
Damages to an automobile caused by the upset of the automobile or its impact with another vehicle or object. Collision losses are paid by the insurer regardless of fault.
Define Coverage for Damage To Your Auto
- That party of the personal auto policy that pays for damage or theft of the insured automobile.
- The optional coverage can be used to insurance both collision and other-than-collision losses.
- Collision losses are paid regardless of fault
Define Extended Nonowned Coverage Endorsement
Endorsement that can be added to auto liability insurance policy that covers the insured while driving any nonowned automobile on a regular basis.
Define Gap Insurance
Insurance that pays the difference between the amount your insurer pays for a totaled car and the amount owed on the loan or lease.
Define Liability Coverage
The part of the personal auto policy that protects a covered person against a suit or claim for bodily injury or property damage arising out of the negligent ownership or operation of an automobile.
Define Medical Payments Coverage
The part of the personal auto policy that pays all reasonable medical and funeral expenses incurred by a covered person within three years from the date of an accident.
-They are paid without regard to fault.
Define Miscellaneous-Type Vehicle Endorsement
Added to insure: motorcycles, mopeds, motorscooters, golf carts, motor homes, dune buggies, and similar vehicles.
NOT snowmobile (requires separate endorsement)
Define Nonowned Auto
A private passenger auto, pickup, van, or trailer not owned by or furnished or made available for the regular use of the named insured or family member, while it is in the custody of or being operated by the named insured or family member.
Define Nonrenewal.
When an insurer decides to discontinue the policy at the end of the coverage period.
Define Other-Than-Collision Loss
Part of the coverage available under Part D. Coverage for Damage to Your Auto in the personal auto policy. All physical damage losses to an insured vehicle are covered except collision losses and those losses specifically excluded.
Define Single Limit
The total amount of liability insurance that applies to the entire accident without a separate limit for each person.The total amoumt of insurance applies to both bodily injury liability and property damage liability.
Define Split Limits
The amount of insurance for bodily injury liability and property damage liability are stated separately.
Define Supplementary Payments. Includes 5
In liability coverage in addition to the policy limits and a legal defense, expenses such as:
- Up to $250 for the cost of a bail bond
- Premiums on appeal bonds and bonds to release attachments
- Interest accruing after a judgement
- Up to $200 daily for loss of earnings
- Other reasonable expenses
Define Temporary Substitute Vehicle
A nonowned auto or trailer that you are using temporarily because of mechanical breakdown, repair, servicing, loss, or destruction of a covered vehicle.
Define Underinsured Motorist Coverage
Coverage that can be added to the personal auto policy. Coverage pays damages for a bodily injury to an insured caused by the ownership and operation of an underinsured vehicle by another driver. The negligent driver may have insurance that meets the state’s financial responsibility or compulsory insurance law requirement, but the amount carried is insufficient to cover the loss sustained by the insured.
Define Uninsured Motorist Coverage
That part of the personal auto policy designed to insure against bodily injury caused by an uninsured motorist, a hit-and-run driver, or a driver whose company is insolvent.
-In some states, property damage is also covered
Define Your Covered Auto
The definition of what is covered as being your automobile. It is made up four classes of vehicles:
- Any vehicle shown in the declaration
- A newly acquired auto
- A trailer owned by the named insured
- A temporary substitute vehicle
Define Diminution In Value
A loss in market or resale value from a direct and accidental physical damage loss to a covered auto that a policy does not cover and specifically told to the insured in a clarifying endorsement.
Define Collision
The upset of your covered auto or nonowned auto or its impact with another vehicle or object.
What must an insurer do when they decide not to renew a policy?
Give the named insured at least 20 days notice before the end of the policy period.
What is PAP and who drafted it?
Personal Auto Policy.
It was drafted by the Insurance Services Office (ISO)
Under PAP, what is an eligible vehicle?
- Four wheeled motor vehicle
- Owned by the insured
- For at least six continuous months
What are the requirements that a pickup or van must meet in order to be considered an eligible vehicle? 2
1-Have a Gross Vehicle Weight Rating of 10,000 pounds or less, and
2- Must not be used to transport business materials unless the materials are incidental to the named insured’s business, and that business in installing, maintaining, or repairing furnishings or equipment, or is used in farming or ranching.
When can a nonowned vehicle be listed in a policy’s declaration?
A vehicle listed in the declaration that is leased for at least six months is a covered auto as well.
What is considered a newly acquired auto?
A private passenger auto, pickup, or van is a covered auto if it is acquired by the named insured during the policy period.
