Personal Auto Flashcards
Under Ben Green’s personal auto policy, each of the following would qualify as a “family member” EXCEPT:
Answer Choices: Select the Correct Answer
Alice Green, Ben’s sister, who lives in Ben’s household.
Susan Green, Ben’s wife. Susan maintains a separate residence although she and Ben are not divorced.
Ben Green, Jr., Ben’s 16- year-old son, living with his father.
Patty Green, Ben’s 21-year-old daughter who maintains a residence with Ben while she is going to college in another state.
Susan Green, Ben’s wife. Susan maintains a separate residence although she and Ben are not divorced. is correct.
EXPLANATION:
The question is asking which person is NOT a family member. Susan Green is no longer a member of the insured’s residence and would not be covered. A spouse is considered to be a family member of the insured IF they live with the insured in the same household.
The definition of “occupying” in the personal auto definitions means all of the following, EXCEPT:
Answer Choices: Select the Correct Answer
In a vehicle.
Upon a vehicle.
Out of or off of, a vehicle.
Under a vehicle.
Under a vehicle. is correct.
EXPLANATION:
“Occupying” means in, upon, getting in, on, out or off. “Under the vehicle” is not included in the definition of occupying.
All of the following are eligible for coverage under a personal automobile policy, EXCEPT:
Answer Choices: Select the Correct Answer
Individuals.
Persons related to the insured.
Corporations.
Persons residing with the insured who are unrelated.
Corporations. is correct.
EXPLANATION:
Corporations may not provide coverage for their vehicle under a Personal Automobile policy.
Physical damage coverage to an insured’s car is covered by which of the following insuring agreements of the Personal Auto policy?
Answer Choices: Select the Correct Answer
Part B.
Part A.
Part D.
Part C.
Part D. is correct.
EXPLANATION:
Part D of the personal auto policy provides physical damage coverage for damage to the insured’s own automobile.
Morton loses control of his car and hits Jordan’s car that was parked legally along the street where Morton was driving. The damage to Jordan’s car is covered by which coverage of Morton’s personal automobile policy?
Answer Choices: Select the Correct Answer
Part D – Physical Damage
Part C – Uninsured Motorist
Part B – Medical Payments
Part A – Liability
Part A – Liability is correct.
EXPLANATION:
Part A – Liability covers the damage that an insured causes to another person’s automobile (among other coverages). Because Morton caused damage to Jordan’s car, Morton’s personal automobile policy will pay the claim under the Part A – Liability insuring agreement.
Which of the following is NOT considered “your covered auto” under a standard Personal Auto policy?
Answer Choices: Select the Correct Answer
A large truck used to transport manufactured goods for a corporation.
A temporary substitute vehicle when the insured’s vehicle needs to be repaired.
A vehicle leased for six months or more.
A newly acquired vehicle.
A large truck used to transport manufactured goods for a corporation. is correct.
EXPLANATION:
A large truck used to manufactured goods for a corporation would not be covered under a Personal Auto policy.
Which of the following vehicles would NOT be eligible for coverage under a personal automobile policy?
Answer Choices: Select the Correct Answer
A newly acquired vehicle owned by the insured.
A pick up truck not used for business.
An SUV.
A vehicle leased for 4 months.
A vehicle leased for 4 months. is correct.
EXPLANATION:
To be eligible for coverage under a personal automobile policy, a leased vehicle must be leased for 6 months or longer.
Which of the following could be considered “your covered auto” under a standard Personal Auto policy?
Answer Choices: Select the Correct Answer
A newly acquired car reported to the insurer.
An owned vehicle not listed on the Declarations page.
A non-owned vehicle available for regular use.
A vehicle used in speed contests.
A newly acquired car reported to the insurer. is correct.
EXPLANATION:
A newly acquired auto under a standard personal automobile policy, would be considered “your covered auto”. The other three answer choices are specifically excluded.
All of the following would be eligible as “your covered auto” under a standard personal automobile policy, EXCEPT:
Answer Choices: Select the Correct Answer
A trailer owned by the insured.
A nonowned vehicle used as a temporary substitute.
A motorcycle owned by the insured.
An eligible vehicle acquired during the policy period.
A motorcycle owned by the insured. is correct.
EXPLANATION:
A motorcycle is not a “four-wheeled” vehicle, which is a requirements for coverage under the personal automobile policy.
Which of the following vehicles is considered “your covered auto” under a standardized Personal Auto policy?
Answer Choices: Select the Correct Answer
A replacement car purchased by the insured a week ago, but not yet reported to the insurance company.
A vehicle used to deliver goods to customers who purchased them.
The insured’s all-terrain vehicle with three wheels.
A company car provided to the insured by an employer.
A replacement car purchased by the insured a week ago, but not yet reported to the insurance company. is correct.
EXPLANATION:
If the insured trades vehicles the newly acquired vehicle is automatically covered. Liability coverage is continuous until the end of the policy period. To continue physical damage coverage certain restrictions and limitations apply. The other choices are NOT covered vehicles under a personal automobile policy.
Which part of the Personal Automobile policy is automatically expanded to provide limits to meet the limits required if the insured is driving and has an accident in another state?
Answer Choices: Select the Correct Answer
Part A.
Part B.
Part C.
Part D.
Part A. is correct.
EXPLANATION:
Part A - Liability of the Personal Automobile policy is expanded automatically to provide the required liability limits of the states where the accident occurred, if that state has higher limits than the state where the policy was issued. This includes “no-fault” and “PIP” coverage.
Which of the following statements is NOT TRUE concerning Assigned Risk Plans?
Answer Choices: Select the Correct Answer
They are state-sponsored insurance plans.
Assigned Risk Plans assist those who are unable to secure automobile insurance in the standard marketplace.
These plans were created to randomly assign all auto policies written in a state to admitted insurers, to be sure all insurance companies can write a proportional amount of business.
All insurers who write automobile policies in the state are required to participate in the plan.
The correct answer is: These plans were created to randomly assign all auto policies written in a state to admitted insurers, to be sure all insurance companies can write a proportional amount of business.
EXPLANATION:
The answer choice that is NOT TRUE is: “These plans were created to randomly assign all auto policies written in a state to admitted insurers, to be sure all insurance companies can write a proportional amount of business.” The other answer choices are true concerning Assigned Risk Plans.
Which of the following would be excluded under Part A of the Personal Auto policy?
Answer Choices: Select the Correct Answer
A person transports people from the airport to nearby hotels for a fee.
A person uses his car to transport his workmates once per week in a car pool.
A person borrows a friend’s vehicle to travel to the airport.
A person gets a speeding ticket in addition to being cited for an accident.
A person transports people from the airport to nearby hotels for a fee. is correct.
EXPLANATION:
The PAP excludes claims when an auto is being used as a taxi or other livery conveyance.
The auto liability limits $100/300/50 are an example of:
Answer Choices: Select the Correct Answer
Split limits.
Combined single limits.
Aggregate limits.
Occurrence limits.
Split limits. is correct.
EXPLANATION:
This is an example of a split limit. Separate limits apply to bodily injury per person, bodily injury per accident, and property damage per accident.
Under a Personal Automobile policy, when an insured is driving a non-owned “temporary substitute vehicle”:
Answer Choices: Select the Correct Answer
There is no coverage under the insured’s policy.
The insured’s policy pays first and the policy of the entity providing the temporary substitute vehicle is considered excess.
The insured’s policy pays for the entire loss.
The policy of the entity providing the temporary substitute vehicle pays first, the insured’s policy pays as excess.
The policy of the entity providing the temporary substitute vehicle pays first, the insured’s policy pays as excess. is correct.
EXPLANATION:
If an insured who is covered by a personal automobile policy is provided a “temporary substitute vehicle” and he/she has an accident, the policy covering the “temporary substitute” pays first (primary) and the insured’s policy provides coverage as “excess” if necessary.
What is the maximum amount payable for bail bonds under the “supplementary payments” provided by Part A of the Personal Auto policy?
Answer Choices: Select the Correct Answer
$250
$100
$300
$400
The correct answer is: $250
EXPLANATION:
The policy will pay up to $250 for the cost of bail bonds that may be required in case of an auto accident.
Charles’ wife Mary has a company car furnished to her through her job. One day, Charles runs out of the wax he is using to polish his boat and he decides to go out to the store and get more. Mary’s company car is parked behind Charles’ car in the driveway, so he grabs Mary’s keys and drives her car to the store. On the way back home, Charles has an accident in which he is at fault, and bodily injury and property damage are the result. Which of the following statements is TRUE regarding how this claim will be settled?
Answer Choices: Select the Correct Answer
Mary’s company policy will pay first, and Charles’ policy will also pay, but on an excess basis.
Mary’s company policy will pay the entire claim, Charles’ policy would not pay because he was not driving the covered auto on the policy.
Charles must pay the claim out-of-pocket because his own auto policy will not pay because he was not driving the automobile named in the declarations and Mary’s company policy will not pay because Mary is the only insured who is covered.
Charles’ policy will pay the entire claim because he was the driver who caused the accident.
Mary’s company policy will pay first, and Charles’ policy will also pay, but on an excess basis. is correct.
EXPLANATION:
When the named insured uses a vehicle that is regularly furnished to a family member, coverage is provided (it is not excluded). However, when the insured is using a non-owned vehicle, the insured’s policy will be considered “excess” over the other insurance covering the vehicle.
Which of the following injuries would be covered under Part A of the Personal Auto policy?
Answer Choices: Select the Correct Answer
Injuries to the insured that are sustained in an auto accident where he/she is at fault.
Injuries to a pedestrian struck by the insured while driving the covered auto.
Injuries to a member of the insured’s family that are sustained in an auto accident where the named insured is at fault.
Damage to personal property being transported by the named insured in the covered auto.
Injuries to a pedestrian struck by the insured while driving the covered auto. is correct.
EXPLANATION:
The coverage applies to third-party bodily injury or property damage claims. The person the insured struck would be covered.
Which of the following coverages is included as “no-fault” coverage on the standardized Personal Auto policy?
Answer Choices: Select the Correct Answer
Uninsured Motorists coverage.
Medical Payments and Physical Damage.
A state-mandated “no-fault” coverage plan.
Liability coverage.
The correct answer is: Medical Payments and Physical Damage.
EXPLANATION:
Part B - Medical Payments and Part D - Physical Damage coverage are both “no-fault” coverages provided by the standardized Personal Automobile policies.
Camilla had an at-fault accident in her car and was sued for damages. Camilla is an executive with a major corporation and earns $2,500 per 5-day work week. Her insurance company has requested her appearance in court to defend herself against some of the damages claimed. She missed 2 days of work and will not be paid for that time. How much will Camilla’s personal automobile policy pay her in total for the lost earnings?
Answer Choices: Select the Correct Answer
$0 because she was at-fault in the accident.
$1,000.
$400.
$500.
The correct answer is: $400.
EXPLANATION:
Even though Camilla makes $500 a day in earnings, the personal auto supplementary payments will only pay up to $200 per day in lost earnings for attending court. Therefore, Camilla would be paid $200 a day, or $400 total.
Under Part A of a Personal Automobile policy, “supplementary payments” refer to which of the following?
Answer Choices: Select the Correct Answer
Payment of defense and other expenses by the insurance company beyond the limits of liability.
Payments made by the insured for damages exceeding his policy limits.
Payments received by the insured directly from the person or persons who caused a loss.
Payments made by the insurance company for the insured’s own medical expenses, to supplement any other medical insurance.
Payment of defense and other expenses by the insurance company beyond the limits of liability. is correct.
EXPLANATION:
Any expense the insurance company incurs in the processing of a claim is outside the limits of coverage. The insured is not penalized by a reduction in the limits of liability by these expenses incurred by the insurer.