P&C Flashcards
A package of both property and casualty coverages combined in a single contract is what type of policy?
Personal Auto Policy
What 4 basic coverages are included in an Auto policy?
Liability, med pay, uninsured/underinsured, Physical damage to the auto
What are the 2 forms of auto policy and which one is more prevalent?
Special Auto policy and Personal Auto policy which is more prevalent
What is the 5th major category of Auto coverage that is only in “no fault” states?
Personal injury protection
What is personal injury protection?
payment is made for medical services, lost wages and replacement services for injured insureds regardless of who was responsible for the accident. A death benefit may also be included.
What does Liability coverage protect?
provides protection against financial loss that results from bodily injury or property damage of OTHERS for which the insured is legally responsible due to an auto accident
What coverage pays reasonable medical and funeral expenses incurred by an insured as a result of bodily injury caused by an accident sustained by an insured?
Medical payments
What coverage provides bodily injury to an insured person when an accident occurs where the other person is uninsured, underinsured or unidentified?
uninsured/underinsured motorist coverage
how is automobile defined for insurance purposes?
a motorized, four-wheel land vehicle designed primarily for use on public roads
what are the four major categories of vehicles?
- standard passenger vehicles, 2. farming vehicles used for farming, 3. pick-ups, panel trucks and vans not commercially registered, utility trailers
what are the four major categories of “covered auto”
- any vehicle on the dec page, 2. any eligible vehicle the insured acquired during the policy period, 3. any trailer owned by the insured, 4. any auto/trailer not owned but is being used as a temporary substitute for a vehicle
How long does the insured have to add a new vehicle to their existing policy to qualify for coverage?
14 days
what are the four groups of insureds?
- insured named in dec page and related residents, 2. anyone operating with insured consent, 3. any person/organization liable for acts of an insured, 4. add’ll residents of household (added by endorsement)
how long does an insured have to update the company that someone in the household no longer lives in it?
30 days
what coverages do people who do not own vehicles need?
named non-owner coverage
what is named non-owner coverage
liability as required by law, physical damage for cars they borrow or rent out, med pay if they are hit by a car as a pedestrian
what is the greatest risk assumed by the owner of a vehicle?
that they may cause serious injury or death to someone else as a result of an accident (to a lesser extent causing property damage to someone elses property)
what does Part A liability coverage cover?
liability coverage for bodily injury or property damage for which any insured becomes legally responsible as a result of an auto accident
who and under what circumstances is covered by Part A liability coverage?
insureds are protected by the policy; coverage applies only if they are legally responsible (ONLY legal liability for bodily injury)
what is covered under bodily injury aka what actually IS bodily injury legally speaking?
bodily harm, sickness or disease and death
who decides whether to settle or defend against third-party claims or suits for injury or damage?
The decision to settle or defend rests with the company
when does the company’s duty to settle or defend end?
when the policy’s limit of liability is exhausted
are the costs to settle or defend included in the coverage?
NO - the costs to settle or defend against a claim are IN ADDITION to the limit of liability stated in the declarations
two ways to express the Part A limit of liability
- split limits, 2. single limits
what are split limits?
three numbers “eg. 100/300/100” the first 2 are bodily injury per person/per accident and the third is property damage
what is single limit?
one number, such as 500, used to express the total liabilty for bodily injury and property damage resulting from one occurrence
what is better - single limit or split limits?
neither is better but single limit allows for more flexibility
an insured has split limits of 100/300/100 and is deemed liable for the following:
Claimant A - $50,000 bodily injury and $25,000 property damage
Claimant B - $65,000 bodily injury and $32,000 property damage.
How much will the insured be personally liable for after insurance pays out?
Nothing - this pays out 100,000 per person. Each person’s bodily injury is less than that and the total of both (50+65=115) is less than 300,000 which is the max per occurrence. And there is 100,000 property damage which covers the PD portions (32+25=57)
an insured has a combined single limit of 300,000 and is deemed liable for the following:
Claimant A - $210,000 bodily injury, $10,000 property damage
Claimant B - $115,000 bodily injury, $5,000 property damage
How much will the insured be personally liable for after insurance pays out?
40,000 because the total damages put together is 340,000 and the max per occurrence for bodily injury and property damage combined is 300,000.
How does one demonstrate financial responsibility in owning and operating a vehicle?
purchasing an auto policy with limits at least equal to the minimum amount required by the state
if the insured drives in another state but has their own state’s liability minimums, what happens in the even of a liability accident?
the policy will automatically provide that state’s required minimum limits.
