Chapter 23 Flashcards
The primary purpose of “nonowned auto” coverage under a Business Auto policy is to cover an accident involving:
Select one:
a. a temporary substitute
b. a leased auto
c. an employee’s vehicle
d. a borrowed vehicle
The correct answer is: an employee’s vehicle
Which section of the Garage Coverage Form covers an auto service station from damage they do to vehicles of others that are in their care, custody, and control?
Select one:
a. Physical Damage Coverage
b. Garage Keepers Coverage
c. Liability Coverage
d. Property Damage Coverage
See Page 23-5.
The correct answer is: Garage Keepers Coverage
The Physical Damage section of the auto policy’s collision coverage pays on what basis?
Select one:
a. replacement cost
b. fair market value
c. stated or agreed value
d. ACV
Physical Damage (Collision and Other Than Collision) pays for damage to the Insured’s vehicle. It always pays on an ACV basis. If it paid on a Replacement Cost basis, some of us would figure out a way to have our vehicles damaged so we could get a new replacement. (Ok, my family members would - you are much too honest for that sort of foolishness.)
The correct answer is: ACV
A truck driver causes an accident which damages a car, injures the car’s driver, and causes the truck to leak chemicals into the ground. The truck’s business auto policy will NOT cover:
Select one:
a. pollution caused by the leaking chemicals
b. damage to the truck
c. damage to the car
d. bodily injury to the car’s driver
The correct answer is: pollution caused by the leaking chemicals
Auto med pay:
Select one:
a. covers any pedestrians hit by the insured’s auto
b. pays medical and funeral expenses for the insured and any passengers in the insured’s auto
c. pays regardless of coverages in other policies
d. is required by both federal and state law
Med pay is optional in most states, has an Other Insurance Clause to pro rate losses between multiple policies, and won’t ever cover persons injured by the Insured (that is why we have Liability). But, Med Pay will cover the Insured and passenger.
The correct answer is: pays medical and funeral expenses for the insured and any passengers in the insured’s auto
Collision coverage under a personal auto policy applies to each of the following EXCEPT:
Select one:
a. a non-owned auto driven by the insured.
b. a delivery truck driven by the insured.
c. a neighbor’s auto or van borrowed by the insured.
d. the insured’s auto or van.
The correct answer is: a delivery truck driven by the insured.
A Business Auto policy covers:
Select one:
a. injury to the driver of the business auto
b. damage to goods of others being transported
c. injury to a pedestrian struck by the insured business auto
d. pollution damage caused by a vehicular accident
Damage to goods being transported would be covered by Inland Marine. The Business Auto policy excludes pollution issues, except it will cover cleanup of oil, diesel fuel, gasoline, or antifreeze which leaks from the insured auto’s mechanical systems as a result of an accident. The driver would be covered by Work Comp. But, we will cover the pedestrian or anyone or anything hit by the covered auto.
The correct answer is: injury to a pedestrian struck by the insured business auto
The definition of “covered auto” in a personal auto policy does NOT include:
Select one:
a. the insured’s trailer
b. a company car available for the insured’s regular use
c. a rental vacation car
d. a new van purchased last week
Bringing back material from Ch. 19 (page 19-23). Stay on your toes!
The correct answer is: a company car available for the insured’s regular use
A business auto policy’s supplementary payments covers each of the following EXCEPT:
Select one:
a. bail bonds
b. traffic fines
c. loss of earnings
d. interest on a judgment
Government fines aren’t covered by insurance policies, at least not the ones we are studying.
The correct answer is: traffic fines
While Jo was passing a truck, lumber fell from the truck onto Jo’s auto. With reference to Jo’s auto policy, this is:
Select one:
a. covered by comprehensive.
b. covered by collision.
c. not covered.
d. covered without a deductible.
Jo wants this covered under Comprehensive because that section has the lowest deductible. Comprehensive covers everything except a collision; however Comprehensive also covers a collision with a bird or animal.
The correct answer is: covered by comprehensive.
After an auto accident, the auto policy requires the insured to notify the:
Select one:
a. police
b. insurer
The correct answer is: insurer
State law requires that commercial autos be covered for each of the following EXCEPT:
Select one:
a. bodily injury liability
b. property damage liability
c. supplementary
d. physical damage
The correct answer is: physical damage
After a business auto policy has been in effect for 60 days, it may be cancelled due to:
Select one:
a. claims filed
b. the Insured’s sale of the business
c. nonpayment of premium
d. the Insured’s purchase of a new auto
Remember that the only reasons allowed in most states for cancellation by the Insurer are (1) Nonpayment of Premium, (2) Concealment or Misrepresentation, (3) Substantial increase in the risk, and, in some states, (4) Financial impairment of the Insurer.
The correct answer is: nonpayment of premium
After an accident involving a covered business auto, the insured must do each of the following EXCEPT:
Select one:
a. submit to examination under oath.
b. authorize the insurer to settle within the policy limits.
c. protect the vehicle from further damage.
d. notify the insurer and forward any summons to the insurer.
The Insurer doesn’t need the consent of the Insured to settle. Remember, however, that this isn’t true with an E&O (Professional Liability)
Policy where consent of the Insured is needed before the Insurer can settle with the victim.
The correct answer is: authorize the insurer to settle within the policy limits.
A driver’s personal auto policy has liability limits of $15,000, $20,000, $10,000. A passenger in the car suffered $17,000 bodily injury when the vehicle hit a building. The passenger’s bodily injuries are covered by:
Select one:
a. comprehensive
b. liability
c. collision
d. physical damage
We seldom think of this problem, but the passengers in a vehicle have the right to sue the driver if the driver’s negligence causes an accident. The policy will pay a maximum of $15,000 for bodily injury by any one person. The driver would be liable for the extra $2,000, but the auto policy will only pay the policy limit of $15,000 for bodily injury to any one person.
The correct answer is: liability
