chapter six - personal auto policy Flashcards
Part A
Liability Coverages
Part B
Medical Payments
Part C
Uninsured Motorist (UM)
Part D
Coverage for Damage to your Auto
Part E
Duties After an Accident or Loss
Part F
General Provisions
Physical injury to, destruction of, or loss of use of tangible property
Property Damage.
Bodily harm, sickness, or disease, including death that results.
Bodily injury
A private passenger auto includes a leased vehicle as long as the lease contract is continuous for how many months duration?
9
3
6
12
6.
(A lease for less than 6 months is not considered private passenger auto eligible for coverage under the Personal Auto Policy)
A ____________vehicle is a covered vehicle when Your Covered Auto is being repaired due to a covered loss.
Conditional
Temporary substitute
Substitute
Replacement
Temporary Substitute
(A temporary substitute is also covered if the vehicle is out of normal use due to breakdown, servicing, loss, or destruction)
If newly acquired auto is an additional vehicle, the insured must report to the insurer with _____ days.
14
Under Part D, Coverage for Damage to your Auto automatic coverage begins on the date the named insured _______
Becomes the legal owner of the vehicle.
For all coverages EXCEPT Part D Coverage for Damage to your Auto, coverage begins on the date the named insured ______
Becomes the owner.
Under Part D, Within how many days must an insured report the purchase of a new vehicle that is replacing an existing vehicle covered by collision coverage?
14
5
15
4
14.
(If a vehicle covered by Part D coverages is replaced by a new car with the same coverage, the policy will automatically extend coverage for 14 days)
Each of the following is a Part A – Liability Coverage Supplementary payment, except:
Premiums on appeal bonds
$200 a day for loss of earnings due to an insurer request to assist in the trial
$250 for the cost of a bail bond
Payment for all defense costs
Payment for all defense costs.
(Payments for all defense costs is part of the Part A - Liability Coverage Insuring Agreement, which also includes payment for bodily injury or property damage for which the insured is legally responsible)
The limit of liability is the most paid by the insurer regardless of all of the following, except:
Amount of surcharges to be applied to policy
Number of vehicles involved
Premiums shown
Number of insureds
Amount of surcharges to be applied to policy.
The amount of surcharge to be applied to the policy is not linked to the limit of liability
A Medical Payments claim will be paid by the insurer within how many months from the date of the occurrence?
24
36
60
18
36.
(A Medical Payments claim will be paid within 3 years for reasonable expenses for medical and funeral expenses regardless of fault)
Which of the following uses of a vehicle is not excluded under the Medical Payments coverage?
A neighbor uses the insured’s car without permission
An insured rides a motorcycle
Insured uses a truck for incidental purposes
An insured drives a company car
Insured uses a truck for incidental purposes.
(Bodily injury sustained by an insured isn’t covered if the insured is using a vehicle while engaged in business. However, a coverage giveback applies to private passenger autos, pickups, vans, and owned trailers used with such vehicles. This exclusion applies to the business use of trucks and other commercial vehicles.)
Which of the following is covered under Part C – Uninsured Motorist Coverage?
Accident was caused by a hit-and-run driver
The insured is also covered by Workers’ Compensation
Punitive damages awarded for the insured
A family member is struck by an insured vehicle
Accident was caused by a hit-and-run driver.
A hit and run vehicle can’t be identified and is therefore considered uninsured
An uninsured motor vehicle is any of the following, except:
A vehicle with liability limits less than the state requirement
A company car
A vehicle that does not have insurance
A vehicle insured by an insolvent insurance company
A company car.
(Besides a company car, a vehicle owned by the insured or a family member, or a vehicle furnished or available for the regular use of the named insured or a family member, is not considered an uninsured vehicle.)
Protects the insured against drivers who do have auto liability insurance, but whose coverage limits are inadequate or insufficient to respond to claims.
Underinsured Motorists Coverage.
Comprehensive covers all of the following losses, except:
Contact with a deer
Falling objects
Theft
Rollover
Rollover
Rollover and hitting another vehicle or object are covered by collision coverage
The insurer’s limit of liability for a vehicle damaged by a loss under Part D is which of the following?
Replacement value
Actual cash value
The greater of actual cash value and replacement value
The lesser of actual cash value and replacement value
The lesser of actual cash value and replacement value.
(The insurer’s limit of liability for loss is the lesser of the actual cash value (ACV) of the vehicle and the amount necessary to repair or replace the vehicle with another of like kind and quality)
Which of the following is not a duty of the insured if the insured’s vehicle is damaged when it hit a tree?
Submit to a physical exam
Promptly notify the insurance company
Submit a proof of loss
Call the police
Call the police.
Calling the policy is only a duty when seeking uninsured motorist coverage
If an insurer non-renews an insured’s policy for underwriting reasons, what is the minimum number of days’ notice to the insured?
20
30
45
60
20 days.
After an automobile policy has been in effect for 60 days, the insurer may cancel the policy for any of the following reasons, except:
Suspension of the driver’s license of the named insured’s or household resident
Material misrepresentation of information on the application by the insured
Submission of four or more claims during a single policy period
Non-payment of premium
Submission of four or more claims during a single policy period.
(Generally, claims history is a valid reason for an insurer to nonrenew a policy, but it is NOT a valid reason to cancel a policy)
Which Part …
Covers reasonable medical and funeral services, regardless of liability, incurred within 3 years?
Part B - Medical Payments
Which Part …
Provides insurance to the insured in the event that an uninsured motorist collides with them.
Part C - Uninsured Motorist (UM)
Which Part …
Spells out the obligations of the named insured and insurer in the case of bankruptcy, fraud, and other general provisions.
Part F - General Provisions
Which Part …
Coverage for damages on the insured’s vehicle, also known as physical damage coverage.
Part D - Coverage for Damage to your Auto
Which part …
If an an insured, or anyone else, wishes to keep coverage under the Personal Auto Policy, they must comply with certain duties.
Part E - Duties After an Accident or Loss
Which Part …
Covers damages for bodily injury and property damage for which the insured is legally liable. The insurer must defend any claim and cover defense costs.
Part A - Liability Coverages
What is the purpose of the Extended Non-Owned Coverage for a Named Individual endorsement?
Extends coverage for a leased vehicle
Covers non-owned vehicles furnished for the insured’s regular use
Coverage is extended 25 miles into Mexico
Covers an individual who does not own a car
Covers non-owned vehicles furnishes for the insured’s regular use.
(this endorsement provides excess coverage over the primary coverage insuring the non-owned vehicle)
Policyholder J hit a deer with his Honda. J has collision coverage with a $250 deductible and Other Than Collision coverage with a $50 deductible. The damage to J’s car was $450. How much will the policy pay?
Nothing
$400
$150
$200
400.
Collision with a bird or animal is covered by Other Than Collision coverage. The $50 deductible would apply.
Under the PAP, which of the following is not considered occupying an automobile?
Jumping off the hood
Standing by the car exchanging insurance information
Slamming fingers in a closing door
Getting out of the car
Standing by the car exchanging insurance information.
Occupying means in or on a vehicle, which includes getting in, getting out, and jumping off
Under a PAP, liability resulting from the insured’s use of a non-owned auto is:
Not covered because of the Care, Custody and Control Clause
Provided on an excess basis
Shared pro rata between the insured’s policy and the policy on the vehicle
Provided on a primary basis
Provided on an excess basis.
The owner’s coverage is primary and the driver’s coverage is excess
Uninsured Motorist Coverage under a Personal Auto Policy covers which of the following vehicles?
Any vehicle being used to carry property or persons for a fee
A vehicle owned by the named insured
A vehicle being driven without permission
A vehicle used primarily for use off public roads
A vehicle owned by the named insured.
Coverage does not apply to non-covered vehicles, nor when a person is using the vehicle without permission
If a bird hits a windshield and breaks it, which Personal Auto Policy coverage would pay the loss?
Supplementary payments
Other Than Collision coverage
Collision coverage
Uninsured motorist coverage
Other than Collision Coverage
Coverage for striking a bird or animal is included under Other Than Collision coverage
The Personal Auto Policy would not provide coverage for which of the following?
A non-owned golf cart
A 5,000-pound pickup truck
A vehicle used in a share-the-expense carpool
A vehicle with fewer than four wheels
A vehicle with fewer than four wheels.
(The PAP does not provide liability coverage for vehicles with less than four wheels or designed for off-road use, except under certain circumstances)
Policyholder B has a PAP with limits of 100/300/50. In an accident for which B was liable, there were BI claims in the amounts of $80,000; $100,000; and $125,000; and PD claims of $20,000 and $35,000. How much will his policy pay?
$300,000 BI and $50,000 PD
$305,000 BI and $50,000 PD
$280,000 BI and $50,000 PD
$305,000 BI and $55,000 PD
$280,000 BI and $50,000 PD
(The Bodily Injury claims of $80,000 and $100,000 will be paid in full. The $125,000 claim exceeds the per person limit and will only be paid up to $100,000 resulting in total BI payments of $280,000. The Property Damage payments will be capped at the policy limit of $50,000 per accident)
(Per person BI/Per accident BI/Per accident PD)
Which of the following is a duty required of the insured in the event of a loss under the PAP?
Give notice of the accident to the insurer within 5 days
Immediately initiate repairs to the vehicle to protect it from further damage
If the vehicle was stolen, contact the insurer for permission to report the theft to the police
Allow an inspection and appraisal of the damage before an auto is repaired
Allow an inspection and appraisal of the damage before an auto is repaired.
(Under Part E - Duties After a Coverage D Loss, the insured must allow an inspection and appraisal before the damage is repaired and promptly notify the police if the car was stolen)
Physical damage to the insured auto that is not covered under collision, and is not otherwise excluded, would be covered under:
Comprehensive
Named perils
Transportation Expenses
Property Damage Liability
Comprehensive
(The Other than Collision coverage, also known as Comprehensive, provides coverage for damages not caused by collision and not excluded in the exclusions)
Which of the following vehicles IS covered under Part B - Medical Payments of the PAP?
A car used to carpool with colleagues
A van used as a residence
A company car issued to a family member
3-wheel vehicle used off-road
A car used to carpool with colleagues.
(A share-the-expense vehicle is not considered a public or livery conveyance, and is therefore not excluded under the policy)
Which of the following Part D claims would be denied under the Personal Auto Policy?
Loss to electronic ignition equipment of the covered auto
Loss to the covered auto caused by road damage to tires
Earthquake damage to the covered auto
Loss to permanently installed sound reproduction equipment of the covered auto
Loss to the covered auto caused by road damage to tires.
(While the insuring agreement of Part D is very broad, many perils are excluded, including wear and tear, freezing, mechanical or electric breakdown, or road damage to tires)
Which of the following is not true about medical payments under the Personal Auto Policy?
The coverage limit applies per person, per accident
Medical expenses of the insured and family members are covered
Coverage applies only for medical expenses incurred within one year of the accident
Medical expenses of all persons occupying the insured auto are covered
Coverage applies only for medical expenses incurred within one year of the accident.
(Medical Payments coverage includes medical expenses incurred within 3 years from the accident)
Choose the true statement regarding Out of State Coverage in the Personal Auto Policy.
The insured should be sure that the liability limits of the policy equal or exceed the minimum limits of the compulsory insurance or financial responsibility laws of any other state where the vehicle might travel
The liability limits of the policy will be the lesser of home state coverage or the minimum liability requirement of the state in which the vehicle is being used
The limit of liability will be the same as the coverage provided in the home state or the minimum liability requirements in the state where the covered auto is being used, whichever is greater
When being used in any state other than the one in which the vehicle is licensed, the liability limits are automatically the minimum financial responsibility limits of the state in which the vehicle is licensed
The limit of liability will be the same as the coverage provided in the home state or the minimum liability requirements in the state where the covered auto is being used, whichever is greater.
(When the covered auto is operated in a state other than that in which it is licensed, the limits of the policy are not less than the contracted amounts or the minimum required by the state in which the vehicle is being used.)
The limit of liability of Coverage D, Damage to Your Auto, under the Personal Auto Policy states that:
The limit of liability is the lesser of the actual cash value (ACV) of the vehicle or the amount necessary to repair or replace the vehicle with another of like kind and quality
The limit of liability is reduced by an amount equal to losses paid during the policy term
The limit of liability is reduced by an amount equal to losses paid on the covered auto
The limit of liability is equal to the limit of liability of Coverage A
The limit of liability is the lesser of the actual cash value of the vehicle or the amount necessary to repair or replace the vehicle with another of like kind and quality.
(Generally, the maximum limit of liability is equal to the actual cash value of the vehicle or vehicles insured. If the damage can be repaired, then the limit of liability is equal to the amount necessary to repair the vehicle or vehicles)
If Policyholder J has no added endorsements, under which of the following scenarios will Policyholder J’s injuries be covered by her Personal Auto Policy under Medical Payments Coverage?
J broke her leg during an accident that occurred during a demolition derby
J slid into a tree while driving her company car on a personal errand
J was driving her own car from the Post Office after retrieving her employer’s mail
J was using her car as a taxi when the vehicle overturned
J was driving her own car from the Post Office after retrieving her employer’s mail.
(Business use of a private passenger car is NOT excluded under Medical Payments Coverage)
Which statement is false regarding uninsured motorist coverage under a Personal Auto Policy?
Coverage does not apply to a vehicle used primarily for use off public roads
Covered persons include the named insured, family members and any other person occupying the covered auto
Coverage does not apply to any vehicle being used to carry property or persons for a fee
Coverage includes injuries suffered by someone using a covered vehicle without permission
Coverage includes injuries suffered by someone using a covered vehicle without permission.
(Coverage does not apply when a person is using the vehicle without permission)
Which of the following damages would be covered under the Liability Coverage of the Personal Auto policy?
Damage to a rental car rented to the insured
Damage to a neighbor’s riding lawn mower in the care of the insured
Damage to property being transported by the insured
Damage caused to a rented garage by the insured auto
Damage caused to a rented garage by the insured auto.
(Liability coverage for property rented to, or in the care, custody, or control of the insured is very limited. Damage to a rental car would be covered by either collision or comprehensive coverage as applicable)
Of the following, which is covered under Part D - Coverage for Damage to Your Auto?
Radar and laser detection devices
Road damage to tires
A newly acquired vehicle added to the policy within 14 days
Custom painting on a van
A newly acquired vehicle added to the policy within 14 days.
Under Part F of the Personal Auto Policy, the Legal Action Against Us provision states that:
Legal action may not be brought against the insurer until the insured has complied with all the terms of the policy
Legal action against the insurer is permitted only when arbitration is unsuccessful
Legal action brought against the insurer must be brought within 180 days of the loss
Legal action brought against the insurer must be brought within 90 days of the loss
Legal action may not be brought against the insurer until the insured has complied with all the terms of the policy.
(No legal action may be taken against the insurance company by anyone unless he/she has complied fully with the policy. In addition, no one may sue the insurance company until it agrees in writing that the insured has a legal obligation to pay for damages.)
Transportation expenses resulting from a collision or OTC loss will be paid up to what amount under Part D of the PAP?
$500
$600
$1,000
$200
$600.
A maximum of $20 per day, up to $600, will be paid for transportation expenses
Which of the following claims would be insured under Uninsured Motorists Coverage?
The insured’s resident son suffered severe injuries after being rear-ended by an uninsured driver
The insured was driving his uninsured car at the time of the accident
An insured is sued and the other party is awarded an injury settlement and punitive damages
A thief stole the insured’s car and was paralyzed after being struck by a drunk driver
The insured’s resident son suffered severe injuries after being rear-ended by an uninsured driver
(Resident family members are covered by Part C if they are injured by an uninsured driver who is legally responsible for an accident.)
Under Part D - Coverage for Damage to Your Auto of the Personal Auto Policy, vehicle upset would be covered under:
Comprehensive
Transportation Expenses
Collision
Other than Collision
Collision.
(As defined in the policy, Collision means the upset of the covered auto or a non-owned auto or their impact with another vehicle or object)
The Personal Auto Policy Collision Coverage applies to which of the following?
Your car, regardless of liability
Your car and the car you run into
Your car only if you are legally liable
The car you run into, regardless of liability
Your car, regardless of liability.
Collision only applies to a vehicle of the insured and is applied regardless of fault
Under the PAP, after a collision the insured is entitled to Transportation expenses up to:
$500
$600
$200
$1,000
$600.
Policyholder G wants her PAP to insure her sedan, primarily used for sales calls, her husband’s SUV for car-pooling, the station wagon that their daughter uses to drive to school, and the van their son uses part-time to deliver dry-cleaning. Which of the following cars will G’s agent tell her is not eligible?
The sedan
The SUV
The station wagon
The van
The van.
(While car-pooling and sales calls are acceptable business uses under the personal auto policy, business deliveries are not)
Claimant A has bodily injuries in the amount of $49,500; claimant B, $19,500; and claimant C $14,000 arising out of a 4-car accident caused by the insured, whose PAP carries limits of 25/50/10. What will the insurer pay?
$50,000
$14,000
$83,000
$49,500
$50,000
A Personal Auto Policy is designed to cover:
Only the non-business use of a personal automobile
The use, by an individual and/or spouse only, of a personal automobile
An individual’s or family’s personal use of an auto
Personal and commercial autos that are owned by an individual or family
An individual’s or family’s personal use of an auto.
(The PAP is designed for insuring individuals and families. A private passenger automobile used for business purposes is eligible, but commercial automobiles are not eligible)
Which of the following vehicles is covered by Liability coverage under the Personal Auto Policy?
Uninsured owned vehicle
Company car
Motorcycle
Non-owned golf cart
Non-owned golf cart.
(Non-owned golf carts are exempted from the exclusion on off-road vehicles and liability arising from their use would be covered under the policy)
Transportation Expenses Coverage under Part D of the Personal Auto Policy begins how long after the covered auto has been stolen?
72 hours
24 hours
Immediately
48 hours
48 hours.
(Transportation Expenses coverage pays $20 per day up to $600, for transportation expenses incurred due to loss of the covered auto. Coverage begins 48 hours after a theft)
The Personal Auto Policy applies:
Only in the U.S. and its territories
Anywhere in the world
Only in the U.S., its territories, Canada, and Puerto Rico
Only in the U.S., its territories, Canada, Puerto Rico, and Mexico
Only in the US, its territories, Canada, and Puerto Rico.
Which of the following is correct regarding Other Insurance under Part A of the Personal Auto Policy?
If there is other liability coverage applicable to the insured auto, the policy will share the loss with the other policy on an excess basis
If there is other liability coverage applicable to the insured auto, the policy will pay the proportion that the limit of liability bears to the total of all limits
The Personal Auto Policy is the primary policy in all cases of duplicate coverage
There is no coverage for non-owned vehicles if there is other coverage applicable to such vehicles
If there is other liability coverage applicable to the insured auto, the policy will pay the proportion that the limit of liability bears to the total of all limits.
All of the following are excluded under Part A of the Personal Auto Policy, except:
A vehicle driven by an unlicensed driver
Damage caused by a vehicle designed mainly for off road use
Use of a non-owned vehicle without permission
Intentional damage caused by the insured
A vehicle driven by an unlicensed driver.
(If a covered driver is using the covered auto with permission, the driver is still covered even if not property licensed._
Which of these statements is not true about Uninsured Motorist coverage?
A driver is considered uninsured when his/her insurer denies a claim
A hit-and-run driver is considered uninsured
Bodily injury must be caused by another person who is legally responsible
Coverage is automatically provided for the damage to the insured vehicle
Coverage is automatically provided for the damage to the insured vehicle.
(UIM insurance provides coverage for bodily injury only. Property damage would be covered by Part D of the owner’s policy, or by Uninsured Motorist Property Damage, which is optionally available)
Company A’s per person Limit of Liability is $100,000 and Company B’s is $200,000 for the same insured. How much will Company B have to pay for a covered $6,000 loss caused by the insured?
Zero
$4,000
$2,000
$6,000
$4,000.
(If other auto liability insurance applies, each policy will pay its proportionate share of the loss. Company B’s limit is 2/3 of the total coverage by both policies. 2/3 of the loss of $6,000 is $4,000.)
Choose the false statement about a newly acquired additional vehicle under the PAP:
Coverage will be as broad as the broadest coverage on any insured vehicle in the household
It must be reported to the insurer within a specified period
It may be used on a farm
It may be used to transport goods for hire if receipts are less than $10,000
It may be used to transport goods for hire if receipts are less than $10,000.
(Vehicles used to carry goods for hire cannot be insured under a Personal Auto Policy)
The Extended Non-Owned Coverage endorsement to the Personal Auto Policy should be added by an insured who is:
Being furnished a company car
Renting a motorcycle
Travelling to Mexico and will be renting a car there
Towing a rented snowmobile
Being furnished a company car.
The endorsement covers non-owned autos furnished or available for the insured’s regular use
Which of the following is covered under Part D of the Personal Auto Policy?
Water or flood damage to a convertible when the top is left down
Damage to a van used as a livery
Theft loss to a portable CD player
Damage to a radar detector
Water or flood damage to a convertible when the top is left down.
(Water or flood damage is covered under Other Than Collision coverage. Damage to audio electronics and radar detection equipment is excluded)
Which of the following is true about the Insuring Agreement of Part D under the Personal Auto Policy?
It states that Comprehensive coverage includes upset of a covered vehicle
It states that the policy will pay for direct and accidental physical loss to the covered auto regardless of fault
It sets forth the coverage of transportation expenses
It outlines the insured’s duties after a loss or accident
It states that the policy will pay for direct and accidental physical loss to the covered auto regardless of fault.
(the insuring Agreement of Part D states that the insurer will pay for loss to the covered auto, including its equipment, minus any applicable deductible)
Which of the following vehicles is not considered an uninsured vehicle?
A vehicle that disappears after it hits and runs
A vehicle owned by the government
A vehicle whose coverage is denied by its insurer
A vehicle insured for less than the state’s minimum required coverage
A vehicle owned by the government.
Under a Personal Auto Policy, which of the following is true of liability for bodily injury resulting from the insured’s use of a non-owned auto?
Coverage is shared pro rata between the insured’s policy and the policy on the vehicle
Coverage is provided on an excess basis
It is not covered because of the care, custody and control clause
Coverage is provided under Part C
Coverage is provided on an excess basis.
The owner’s coverage is primary and the driver’s coverage is excess
Which of the following vehicles would be excluded under the Personal Auto Policy?
A motorcycle
A pickup
A station wagon
An SUV
A motorcycle.
A motorcycle would not be covered unless added by endorsement
Which of the following claims would be covered by Collision Coverage under Part D of the Personal Auto Policy?
Damage to the auto caused by objects blown into it during a severe windstorm or tornado
Damage to the insured auto’s bumper when the auto crashed into a tree
Damage to the auto caused by collision with an animal on the roadway
Breakage of the windshield caused by collision with a stone or other missile
Damage to the insured’s auto’s bumper when the auto crashed into a tree.
(Part D of the policy specifically stipulates certain causes of loss that are not considered collisions. They include missiles or falling objects, fire, theft, explosion, windstorm, contact with a bird or animal, among others)
M and C both have Personal Auto policies with liability limits of 20/30/10. If M borrows C’s car and injures a pedestrian, causing injuries that will cost $5,000 to treat, which policy will provide coverage for the injured party?
M’s policy
Neither policy, since C’s car was not on M’s policy
Both policies will share the loss pro-rata
C’s policy
C’s policy
The owner’s coverage is primary (insurance follows the car not the driver). Coverage for a non-owned vehicle is excess
