Lesson 7: Personal Auto Policy

Question 1

Auto insurance liability cov - bodily injury limits

Answer 1

limit for each person/per occurrence
$25k/$50k (min required by law)
50/100
100/300
250/500

Question 2

Auto insurance liability cov - med payments coverage limit per person

Answer 2

500; 1000; 2500; 5000; 10k; 25k; 50k; 75k; 100k

Question 3

Auto insurance liability cov - property damage limits

Answer 3

5k (min required by law); 10k; 25k; 50k; 100k

Question 4

Personal automobile policies cover

Answer 4

vehicles registered to individuals and operated primarily for personal activities. Driving to work is a personal activity. A policy also allows the use of a personal vehicle for incidental business activities. Example: Driving to an office supply store to purchase replacement ink for your small business’s copy machine.

Question 5

Auto - named insured

Answer 5

the individual or couple named in the policy

Question 6

Auto - Bodily injury

Answer 6

physical injury, mental anguish, P&S, loss of consortium

Question 7

Auto policy - property damage

Answer 7

injury to real or personal property through another’s negligence

Question 8

Non-owned auto insurance

Answer 8

provides liability cov for bodily injuries or prop damage that you or your employees cause while driving for work

Question 9

Auto policy - covered auto

Answer 9

any auto listed in the dec section of the K; newly acquired vehicle, trailer owned by a named insured, or a temporary substitute vehicle

Question 10

Temporary substitute

Answer 10

used while the covered auto is being serviced, repaired, or replaced

Question 11

Financial responsibility law state

Answer 11

To legally operate an automobile in the State of Georgia, a person must demonstrate the ability to financially compensate a person(s) they may injure or cover the cost of the damage they may cause to another person’s property.

Question 12

Financial responsibility def

Answer 12

The ability to pay costs resulting from damages or injuries as the “at-fault” party in an accident.

Financial Responsibility is in the following manner:

Liability Coverage: Personal automobile insurance
Motor vehicle bond
Cash or security deposit

Question 13

Compulsory insurance laws in GA (auto)

Answer 13

Minimum liability coverage
25/50/25 – Split limits or
75,000 – Combined single limits

Question 14

25/50/25 Split limit explained

Answer 14

For the 25/50/25 limit, the insurance company is going to pay out up to $25,000 to any one person who suffers injuries and or vehicle damage in an accident you cause. If there are $100,000 in damages, the insurance company isn’t going to pay the excess $25,000 to any one person for bodily injury. If there is more than one person injured the insurance company will pay up to $50,000 per occurrence for bodily injury. This policy will no pay more than $25,000 per person for bodily injury and $25,000 for property damage.

Question 15

Split Limit vs Combined Single Limit Coverage

Answer 15

Single limit coverage: business auto policy is usually written on a combined single limit coverage.
Single limit coverage applies to all claims; it is similar to blanket coverage. It is more expensive than the Split Limit Coverage, which can be used for both bodily injury and property damage.

Question 16

Vehicles that are covered by auto policy

Answer 16

• Private passenger automobiles
• Trucks and Vans< 10,000 lbs
• Owned Vehicles
• Leased Vehicles (with a lease-period six months or longer)

Question 17

Vehicles not covered by auto policy

Answer 17

• Vehicles owned by businesses
• Taxis
• Motorcycles
• Trucks/Vans >10,000 lb
• Vehicles used for government purposes
• Vehicles furnished for the regular use of an insured by an employer

Question 18

Auto policy territorial limits

Answer 18

United States
Canada
United States Territories & Possessions
- Puerto Rico
- Guam
- United States Virgin Islands
Note: the policy territory does NOT include Mexico.

Question 19

Auto policy - insured

Answer 19

The insured fall under the following categories.
1. Named Insured
2. A spouse residing in household
3. Family members residing in household
4. Anyone driving with permission

Question 20

Auto policy - “Occupying”

Answer 20

in, upon, getting in, on, out of or off of the covered vehicle

Question 21

Auto policy - new vehicle coverage

Answer 21

1. Newly acquired additional vehicle provides physical damage coverage for 14 days.
2. Newly acquired replacement –
   automatically receives the fullest possible coverage under existing policy, until the end of the policy term

Question 22

Trailer

Answer 22

attached to the covered vehicle

Question 23

Auto - Coverage A (Liability)

Answer 23

Covers another person’s bodily injury or property damage

Payment is made only if the insured is negligent
Supplementary Coverages
Defense costs
Up to $250 for the cost bail bonds for accidents including violations.
Premiums on appeal bonds have no limit
Pre-judgment interest
Up to $200 per day loss of earnings
Any other reasonable expense at the insurers’ request.
Minimum Liability Coverage by Law

$25,000 for the death or injury of a person per occurrence; $25,000 if one person is injured in the accident; $50,000 for the death or injury of two or more persons in any one occurrence; $25,000 for damage to the property of other people.

Question 24

Auto - Coverage B (Medical Payments)

Answer 24

1. Necessary medical payments incurred within 3-years of accident
2. Payment regardless of fault.
3. Insured: Named insured includes Spouse, Family members, Passengers
4. Medical payments will apply for accidents occurring while occupying the vehicle and the named insured, spouse, family members, passengers are covered as pedestrians
5. Medical Payments limits are per person, per accident.
   There are no minimum limits and optional limits are available.

Question 25

Auto - coverage C (uninsured motorist coverage)

Answer 25

1. An insurance company must offer, insured can accept or reject by signing a rejection form
2. Insured: Named Insured, Family members, Passengers
3. Minimum Limits – 25/50/25
4. Hit & Run qualifies as uninsured motorists
5. Underinsured motorists coverage is automatic
   ——Uninsured Motorists are negligent drivers who have failed to maintain car insurance required by law.
   ——Underinsured Motorists are drivers that have liability limits too low to cover the damage or medical expenses
6. Arbitration occurs when there is a disagreement of damage to be paid or if there is coverage each party would select an arbiter. Then those two would select an arbiter and a decision is then made on the loss.

Question 26

Auto - Coverage D (physical damage)

Answer 26

Other than Collision (Comprehensive which is all risk)

Collision and upset with another vehicle or object that turns the vehicle over

Question 27

Auto - transportation expenses

Answer 27

These expenses are included in Part D of PAP and apply to any collision or Other Than Collision (OTC) loss if the declaration shows the policyholder has obtained OTC coverage or collision coverage.

1 Automatic with physical damage coverage
2 Loss compatible with coverage
3 Loss of use of a vehicle
4 If a car is stolen, there is a 48 hr waiting period before applying rental coverage.
5 Other than a stolen vehicle, there is a 24 hr waiting period before applying rental coverage.
6 $20.00 per day
7 $600 maximum

Question 28

Auto - Part E (duties in the event)

Answer 28

File a police report for an uninsured motorists claim or stolen vehicle
Names and addresses of witnesses
Report loss as soon as possible
Cooperate with insurance company

Question 29

Auto - Part F (General provisions)

Answer 29

Termination (when the policy is canceled)

–An insurance company can cancel for any reason in 1st 60-days
–After the first 60-days the policy can cancel for the following reasons:
——–Non-payment of premium
——–Misrepresentation, Example: The insured lied about a moving violation or felony conviction.
——–Suspension of driver’s license
–When canceling in the first 60-days, the insurance company must give 10-days notice regardless of the reason for cancellation and non-renewal
–After the first 60-days, the insurance company must give 10-days notice of cancellation due to non-payment; and 30-days notice for any reason other than non-payment.

Question 30

Auto - Discounts

Answer 30

For up to 10% discount
–Completed defensive driving course and the driver is at least 25 years old, completed an approved course, and has a clean driving record with no at-fault accidents for 3 years.
–Honor student discount (B or more average), Full-time- Under 25 years of age and maintains a clean driving record.
10% discount on liability, medical-payment, and collision coverage.

Question 31

Auto insurance - settlements

Answer 31

The insurer may elect a cash settlement based upon the cost of a “comparable automobile,” less any deductible provided in the policy.

Cash settlement amount shall include:
—sales tax of comparable automobile, discounted by a sales tax of loss vehicle.
—fees incident to transfer of claimant’s vehicle to salvage status

If requested, the insurer shall provide info of salvage dealer, pool, auction, or dismantler. The insurer shall disclose that notice must be provided to the Department of Motor Vehicles, and notice may affect the loss of vehicle future resale/insured value.

Question 32

auto insurance - adjustments

Answer 32

Must be discernible, measurable, itemized, and specified as well as appropriate in dollar amount and documented in the claim file.

Deductions that cannot be supported shall not be used.

Cost of a comparable automobile shall not include a deduction for the condition of a loss vehicle; unless the condition is below average for that particular year, make, and model of vehicle.

Question 33

auto - consumer bill of rights

Answer 33

Auto Body Repair Consumer Bill of Rights. Every insurer that issues automobile liability or collision insurance policies shall provide the named insured(s) with a copy of the Auto Body Repair Consumer Bill of Rights. If an electronic copy is available, the bill may be transmitted electronically. If the insurer provides the bill following an accident or loss, the insurer shall provide the bill to the particular insured filing an insurance claim. If the insurer provides the bill at the time of application, all named insureds shall be provided with a copy upon renewal of the policy.

Question 34

Auto - uninsured motorist bodily injury (UMBI)

Answer 34

Pays for injuries to the insured and any person in the insured’s car when there is an accident with an uninsured driver who is at fault. The limits are the same as liability coverage limits.

Question 35

Underinsured motorist (UIM)

Answer 35

Covers limited costs for bodily injury and property damage if the insured is in a collision with an individual who does not have enough coverage to pay for damages.

Question 36

Uninsured motorist property damage (UMPD)

Answer 36

Pays for the damage to a vehicle from a collision with an uninsured individual who is at fault. The limit is $25,000. This only pays if the uninsured driver is identified. The insured may not need this if they have collision coverage.

Question 37

Medical payments coverage

Answer 37

Covers the cost of medical expenses if the insured or the insured’s passengers are injured. This coverage pays for immediate medical care, no matter who is at fault.

Question 38

Assigned Risk Plans

Answer 38

Most companies will not accept drivers with poor driving records because their loss experience is much higher than the average driver. Yet the law requires these people to carry insurance. Assigned Risk Plans are voluntary agreements between licensed insurance companies that agree to share poor risks. Because these risks are randomly assigned to the participating companies, they are called assigned risks. Assigned risk drivers are usually issued policies with the minimum required liability limits for BI and PD.

Question 39

Mary Lou has split limits of $100,000/$300,000 bodily injury on her personal auto policy. She hits a pedestrian who claims damages of $225,000. Mary Lou’s medical expenses totaled $25,000. What is the maximum liability of the policy for this accident?

Answer 39

$100k plus defense costs

Question 40

Which of the following is covered by an insured’s auto property damage liability insurance?

Answer 40

Damage to the property of others caused by the insured’s negligence

Question 40

India carries $5,000 medical expense coverage at the time of a covered accident. India and three passengers were injured.

Answer 40

$20,000

Question 41

What Personal Auto Coverage would pay for the insured’s injuries sustained when struck by a hit-and-run driver while crossing a busy street?

Answer 41

medical payments

Question 42

How much will the Personal Auto Policy Coverage Part A pay towards an appeal bond?

Answer 42

Unlimited to dollar amount

Question 42

Which of the following is not included in the policy conditions?

Answer 42

The name of the parties to the contract

Question 43

The physical damage section of the personal auto policy excludes losses arising from:

Answer 43

mechanical breakdown.

Question 44

Part C – Uninsured coverage:

Answer 44

Is required to be offered by insurance companies, but the insured can reject it.

Question 44

Which of the following causes of loss is covered by Other-Than-Collision Coverage written under a Personal Auto Policy?

Answer 44

vandalism damage to tires

Question 45

If the named insured allows his son to use one of the vehicles covered under the personal auto policy (PAP), is the son an insured under the PAP even though the son does not reside in the named insured’s household?

Answer 45

Yes, because the definition of “insured” includes any person using the named insured’s covered auto

Question 46

All policies covering private passenger vehicles must be issued for a minimum term of:

Answer 46

6 months

Question 47

A remedy is available when the insured and the insurer cannot agree on whether the insured is entitled to collect damages or on the amount of damages to be awarded in uninsured motorist cases. This remedy is:

Answer 47

arbitration

Question 47

What is a temporary substitute automobile?

Answer 47

An auto not owned by an insured and used with the owner’s permission while the insured’s auto is withdrawn from use because of its loss, destruction, breakdown or servicing

Question 47

Which of the following is covered by an insured’s auto property damage liability insurance?

Answer 47

Damage to the property of others caused by the insured’s negligence

Question 48

Which one of the following best outlines the intent of automobile liability insurance?

Answer 48

To pay on behalf of the insured, all sums which the insured shall become legally obligated to pay as damages caused by accident and arising out of the ownership, or use of the automobile

Question 48

All of the following would be covered by Part A – Liability on a personal auto policy, except:

Answer 48

The insured brakes suddenly to avoid hitting a squirrel who has run into the street and a passenger in the insured’s automobile is injured.

Question 48

All of the following are true about newly-acquired eligible vehicles, except:

Answer 48

Comprehensive nor Collision Coverage is never automatically provided for newly acquired vehicles.

Question 49

Personal Auto Policy (PAP) provisions includes duties of insured after an accident. All of the following are duties of insured after an accident, except:

Answer 49

do not leave the auto and accident area

Question 49

An insured has a Personal Auto Policy providing full coverage comprehensive and $250 deductible collision coverage. The insured’s auto catches fire and as a result strikes a tree, causing total damage of $250. How much would the insured recover?

Answer 49

$250

Question 50

Which of the following losses would be covered by Other-Than-Collision Coverage under an automobile policy?

Answer 50

hail

Question 51

Which of the following is true with respect to Automobile Medical Payments?

Answer 51

Coverage applies to reasonable expenses incurred within three years from the date of accident for necessary medical and related services

Question 51

All of the following could be covered under a named insured’s personal auto policy, except:

Answer 51

A private passenger vehicle owned by the named insured’s spouse who moved to a separate residence five months ago.

Question 51

All of the following would be included in the definition of your covered auto on a personal auto policy, except:

Answer 51

A vehicle furnished for regular use of the named insured by the insured’s employer.

Question 52

All the following statements concerning the physical damage section of the personal auto policy are correct, except:

Answer 52

coverage is excluded for private passenger autos borrowed by the named insured or family members

Question 53

What is the principle coverage under the Personal Auto Policy coverage Part D?

Answer 53

Physical Damage coverage

Question 54

All of the following are typical claims procedures of an insurance agent in the event of a loss, except:

Answer 54

Act as the insureds’ public adjuster

Question 55

Mary Lou has split limits of $100,000/$300,000 bodily injury on her personal auto policy. She hit a pedestrian who claims damages of $225,000. Mary Lou’s medical expenses totaled $25,000. What is the maximum liability of the policy for this accident?

Answer 55

$100,000 plus defense costs

Question 55

Auto liability insurance is divided into coverage for two types of damage one person may cause another. They are:

Answer 55

bodily injury and property damage

Question 56

Under Uninsured Motorists coverage, an insured can collect from his own liability insurer:

Answer 56

Bodily injury and property damage he would be legally entitled to collect from an uninsured motorist

Question 57

India carries $5,000 medical expense coverage at the time of a covered accident. India and 3 (three) passengers were injured and the necessary medical treatment cost were as follows: $8,500 for India; $6,000 for Alicia; $8,000 for Erica; $10,000 for Brittany. How much will the policy pay under Part B?

Answer 57

$20,000

Question 58

All of the following would not be covered by a personal auto policy’s liability section, except:

Answer 58

The insured’s teenage daughter causes an accident while driving the family car without permission.

Question 59

An insured’s auto is stolen and recovered five days later. If the insured claims transportation expenses of $32.50 per day, how much will be paid under the covered peril?

Answer 59

$60.00

Question 60

What is the maximum amount payable for bail bonds under supplementary payments in the Personal Auto Policy?

Answer 60

$250