Personal Auto

Question 1

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.

Answer 1

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.

Question 2

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.

Answer 2

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.

Question 3

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.

Answer 3

Corporations. is correct.

EXPLANATION:
Corporations may not provide coverage for their vehicle under a Personal Automobile policy.

Question 4

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.

Answer 4

Part D. is correct.

EXPLANATION:
Part D of the personal auto policy provides physical damage coverage for damage to the insured’s own automobile.

Question 5

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

Answer 5

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.

Question 6

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.

Answer 6

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.

Question 7

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.

Answer 7

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.

Question 8

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.

Answer 8

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.

Question 9

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.

Answer 9

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.

Question 10

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.

Answer 10

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.

Question 11

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.

Answer 11

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.

Question 12

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.

Answer 12

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.

Question 13

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.

Answer 13

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.

Question 14

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.

Answer 14

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.

Question 15

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.

Answer 15

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.

Question 16

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

Answer 16

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.

Question 17

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.

Answer 17

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.

Question 18

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.

Answer 18

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.

Question 19

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.

Answer 19

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.

Question 20

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.

Answer 20

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.

Question 21

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.

Answer 21

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.

Question 22

An insured with auto limits of 10/20/10 causes bodily injuries to a third party with damages awarded of $8,000. After losing in court he has defense costs of $5,000. What is the insurance company’s responsibility to pay?

Answer Choices: Select the Correct Answer
$8,000
$5,000
$13,000
$10,000

Answer 22

$13,000 is correct.

EXPLANATION:
Defense costs are in addition to the limits of coverage. The insurer would be obligated to pay damages of $8,000 and the $5,000 in defense costs.

Question 23

When workers’ compensation benefits are payable after an automobile accident, how will Part B of the personal automobile policy be applied?

Answer Choices: Select the Correct Answer
Part B will pay as excess insurance over the workers’ compensation benefits.
Part B of the personal auto policy will pay pro-rata with the workers’ compensation policy.
Workers’ compensation benefits will be paid as excess insurance over the Part B payments.
Part B is excluded if workers’ compensation benefits are payable.

Answer 23

Part B is excluded if workers’ compensation benefits are payable. is correct.

EXPLANATION:
The Part B - Medical Payments insuring agreement of the personal automobile policy is excluded if workers’ compensation benefits are payable.

Question 24

The insured and her 18-year-old son, who lives in the insured’s household, are crossing the street when both of them are struck by a drunk driver. The Part B - Medical Payments coverage of the insured’s personal auto policy will:

Answer Choices: Select the Correct Answer
Provide coverage for the insured, but not her son.
Provide coverage for both the insured and her son.
Will not apply because the insured and her son were pedestrians when struck.
Will cover only the insured’s son because the insured should have been more careful crossing the street.

Answer 24

Provide coverage for both the insured and her son. is correct.

EXPLANATION:
Part B - Medical Payments of the insured’s personal auto policy would cover the insured and her son for treatment for the injuries they sustained.

Question 25

Personal Automobile policies use which of the following alternative dispute methods when the insured and the insurance company cannot agree on the amount to be paid by the uninsured or underinsured motorist coverage?

Answer Choices: Select the Correct Answer
Subrogation.
Mediation.
Arbitration.
Litigation.

Answer 25

Arbitration. is correct.

EXPLANATION:
The personal automobile policy provisions specify that arbitration be used when the insured and the insurance company cannot agree on the amount to be paid by Coverage C of the policy.

Question 26

All of the following would be covered under Part B - Medical Payments of the Personal Auto policy, EXCEPT:

Answer Choices: Select the Correct Answer
Injuries sustained by the insured’s mother when a tree falls on the automobile while she is sitting inside the automobile while it is parked in the driveway.
Injuries sustained by an elderly man riding in the insured vehicle after having paid the insured to take him to the grocery store.
Injuries sustained by the insured when using his father’s pickup truck to pick up furniture he recently purchased.
Injuries sustained by a neighbor who carpools with the insured and who, while getting into the insured’s car, slips, falls, and injures her knee.

Answer 26

Injuries sustained by an elderly man riding in the insured vehicle after having paid the insured to take him to the grocery store. is correct.

EXPLANATION:
Coverage while using the vehicle as a public or livery service is excluded. This does not apply to share-the-expense car pooling.

Question 27

Coverage C - Uninsured Motorist of a standard, unendorsed Personal Automobile policy would provide coverage for all of the following, EXCEPT:

Answer Choices: Select the Correct Answer
Bodily injury sustained by an insured or occupants of the insured vehicle.
The vehicle that is responsible for the bodily injury sustained must meet the definition of an uninsured vehicle.
The insured or occupants of the insured vehicle must be legally entitled to recover damages for bodily injury.
Property damage sustained by the insured vehicle caused by an uninsured vehicle.

Answer 27

The correct answer is: Property damage sustained by the insured vehicle caused by an uninsured vehicle.

EXPLANATION:
The only types of damages that can be recovered under Part C - Uninsured Motorists coverage is for bodily injury. Property damage is not covered under Coverage C of the standardized Personal Automobile policies, unless an endorsement is attached.

Question 28

The Part B - Medical Payments coverage of Dorinda’s personal automobile policy has a limit of $5,000. Three of Dorinda’s friends were injured in an accident that occurred while they were riding in Dorinda’s car. The amount of medical expenses per person were as follows:

Harvey - $1,500
Diane - $4,575
Thomas - $6,250

Answer Choices: Select the Correct Answer
Each of the three people would receive $1,667.00 ($5,000 divided by 3) to apply to their medical expenses.
Harvey would receive $1,500, Diane would receive $4,575, and Thomas would receive $6,250.
Harvey would receive $1,500, Diane would receive $4,575, and Thomas would receive $5,000.
The injured parties would each receive $5,000, the limit of Dorinda’s policy, per person.

Answer 28

The correct answer is: Harvey would receive $1,500, Diane would receive $4,575, and Thomas would receive $5,000.

EXPLANATION:
The limit of Part B is $5,000 PER PERSON. However, each person will only receive the amount they spent in medical expenses, up to $5,000. Therefore, Harvey would receive $1,500, Diane would receive $4,575, and Thomas would receive $5,000.

Question 29

All of the following would be considered “uninsured motorists”, EXCEPT:

Answer Choices: Select the Correct Answer
A motorist driving without liability insurance.
A motorist who is covered for liability, but does not carry enough coverage to meet the state’s financial responsibility requirements.
A motorist driving with coverage up to the required state financial responsibility limits for liability, but not high enough to pay the claims for an at-fault accident.
A motorist with liability coverage with an insurance company that has become insolvent.

Answer 29

The correct answer is: A motorist driving with coverage up to the required state financial responsibility limits for liability, but not high enough to pay the claims for an at-fault accident.

EXPLANATION:
A motorist driving with coverage up to the required state financial responsibility limits for liability, but not high enough to pay the claims for an at-fault accident is an UNDERinsured motorist, not an UNinsured motorist.

Question 30

Parmelia is covered under two separate standardized Personal Automobile policies, with Part C limits under both policies set at $200,000. Parmelia is involved in an accident with an uninsured motorist and she sustains bodily injury damages for $262,320. How much will Parmelia receive when she submits a claim for these damages?

Answer Choices: Select the Correct Answer
$262,320.
$200,000.
$400,000.
It depends Permelia’s percentage of fault in the accident.

Answer 30

The correct answer is: $200,000.

EXPLANATION:
Permelia will receive $200,000, because Part C does not permit the stacking of limits. She will only collect the highest limit of a single policy for uninsured motorists coverage.

Question 31

Gavin, the named insured under a Personal Auto policy, his daughter Tabitha, and two of her friends are riding in the covered auto when Gavin accidentally runs a stop sign, striking another vehicle. Everyone in Gavin’s vehicle was injured as well as the driver and two passengers in the other car. Who would be covered for their injuries under Part B of Gavin’s policy?

Answer Choices: Select the Correct Answer
Gavin and Tabitha.
Gavin, Tabitha, and Tabitha’s friends.
Gavin, Tabitha, Tabitha’s friends, the driver and passengers in the other car.
The driver and passengers in the other car.

Answer 31

Gavin, Tabitha, and Tabitha’s friends. is correct.

EXPLANATION:
The injuries to Gavin, Tabitha and Tabitha’s friends would be the only ones covered by Part B of the Personal Auto policy.

Question 32

Uninsured Motorist (UM) coverage claims are:

Answer Choices: Select the Correct Answer
Third-party claims.
Processed by the state government.
First-party claims.
Must be litigated in a court of law to determine coverage.

Answer 32

First-party claims. is correct.

EXPLANATION:
Uninsured Motorist coverage claims are first-party claims because the party injured in an automobile accident files the claim against their own insurance policy.

Question 33

Pete is covered under a Personal Auto policy with Indemnify Insurance when his car is stolen. Six months pass, Pete’s car is never found and the policy period with Indemnify expires. Pete decides to purchase another Personal Auto policy with Fiduciary Insurance, Inc. Pete is covered under the policy with Fiduciary for about three months, when his stolen automobile is found with only minor physical damage. How will this claim be handled?

Answer Choices: Select the Correct Answer
Indemnify and Fiduciary will split the claim according to their percentage of liability.
Fiduciary Insurance will pay the claim.
The claim will not be covered.
Indemnify Insurance will pay the claim.

Answer 33

Indemnify Insurance will pay the claim. is correct.

EXPLANATION:
The Personal Auto policy states that the policy applies only to accidents and losses that occur during the policy period listed on the Declarations page. Therefore, Indemnify Insurance would be responsible for the claim because it was the policy in force at the time of the loss.

Question 34

David has received a cancellation notice in the mail for the standard Personal Automobile policy he purchased 10 days ago. The notice informs David that his policy will be cancelled 10-days from the date the notice was mailed. Which of the following is the most likely reason his policy was cancelled?

Answer Choices: Select the Correct Answer
A significant change in the risk was discovered.
Previous insurance fraud was found during the underwriting period.
Misrepresentation by the insured.
Non-payment of premium.

Answer 34

Non-payment of premium. is correct.

EXPLANATION:
The policy was still in the underwriting period (the first 60 days that the policy was in effect) and states that 10-days’ notice must be provided for non-payment of premium

Question 35

Spencer is covered under a standard Personal Automobile policy with a policy inception date of October 15th. Additionally, the policy will expire on October 15th of the current year. Spencer contacts his agent on October 7th and asks to have an new endorsement added to his policy. The agent agrees, adds the coverage the same day, and informs Spencer that there will be an additional premium of $20 per month charged. When will the adjustment of premium be effective for Spencer?

Answer Choices: Select the Correct Answer
Spencer would not be permitted to add an endorsement until the policy period ends and a new policy is issued sometime after October 15th.
October 16th.
October 15th.
October 7th.

Answer 35

October 7th. is correct.

EXPLANATION:
Any premium adjustment made to the standard Personal Auto policy due to a change to the policy, becomes effective on the date of the change, therefore the correct answer would be October 7th.

Question 36

George Wilson is covered under a standard Personal Auto policy. Which of the following policy coverages would apply when a deer leaps onto Mr. Wilson’s car and causes extensive damage?

Answer Choices: Select the Correct Answer
Part D - Other Than Collision (Comprehensive).
Part A - BI & PD Liability.
Part D - Collision.
Part C - Uninsured Motorists Coverage.

Answer 36

Part D - Other Than Collision (Comprehensive). is correct.

EXPLANATION:
Contact with a bird or animal is considered to be an “other than collision” loss under Part D of the PAP.

Question 37

Generally, losses that are covered under the “collision” coverage of a Personal Automobile policy are NOT covered under the “other than collision” coverage. Which of the following would be an exception to this general rule, allowing a claim to be paid under EITHER coverage?

Answer Choices: Select the Correct Answer
Glass breakage that is due to an upset or rollover of a covered auto.
Glass breakage due to contact with a bird or animal.
Glass breakage caused by theft or larceny.
Glass breakage caused by a falling object.

Answer 37

Glass breakage that is due to an upset or rollover of a covered auto. is correct.

EXPLANATION:
Glass breakage is typically covered under the OTC coverage. However, if there is a glass breakage loss due to a collision, the insured can have this loss covered under the “collision” coverage to avoid paying a deductible under the Collision coverage and paying another deductible under the OTC coverage. As a side note, several states prohibit insurers from including a deductible at all for glass breakage.

Question 38

What is the Part D limit of liability for damage to a non-owned trailer under the Personal Auto policy?

Answer Choices: Select the Correct Answer
$1,500.
$500.
$1,000.
$2,000.

Answer 38

$1,500. is correct.

EXPLANATION:
The limit is $1,500 for damage to a non-owned trailer that is designed to be pulled by a private passenger auto, pickup truck or van

Question 39

Jim and Tina are a married couple that enjoy the outdoors. They have their motor home and pick-up truck covered by a standard Personal Automobile policy and both vehicles are listed on the declarations page of the policy. They attend a Camping & RV show on May 1st and purchase a small camper to use when camping near their home that summer. Jim calls the insurance agent on May 10th and adds the camper to the policy. On May 24th, Jim and Tina are pulling their new camper with their pick-up truck on their way to a nearby camp site. Jim is driving and turns a tight corner, clipping a street lamp with the side of the camper. How will Jim and Tina’s Personal Auto policy cover the body damage to their camper?

Answer Choices: Select the Correct Answer
The body damage will not be covered by Part D of the policy because Jim did not report the new camper to the insurance agent within the required 7 days.
The body damage will be covered by Part D of the policy because Jim reported the new camper to the insurance agent within the required 14 days.
The body damage will not be covered under any part of the Personal Auto policy because the camper was not listed on the declarations page of the policy.
The body damage will be covered by the property damage coverage of Part A of the policy.

Answer 39

The body damage will be covered by Part D of the policy because Jim reported the new camper to the insurance agent within the required 14 days. is correct.

EXPLANATION:
Body damage to a camper body IS covered by Part D if the Personal Automobile policy, even if the camper was not listed on the declarations page of the policy, if it was acquired during the policy period and added to the policy within 14 days of the acquisition.

Question 40

Which of the following losses would be covered by Part D of a standard Personal Auto policy providing both “Other Than Collision” (Comprehensive) and “Collision” coverage?

Answer Choices: Select the Correct Answer
A front tire blows out in a high-speed head-on collision, which also causes extensive damage to the vehicle.
An insured did not add antifreeze to his radiator and the engine is damaged when the cooling system freezes.
A radar detector is destroyed when an insured hits a tree after skidding on a patch of ice.
The bearings in a rear wheel burn out after 85,000 miles of use.

Answer 40

A front tire blows out in a high-speed head-on collision, which also causes extensive damage to the vehicle. is correct.

EXPLANATION:
Road damage to tires is specifically excluded under Part D (See Screen #4), however the claim described in the correct answer involves a collision, therefore the entire claim would be covered minus the deductible because the coverage is open peril (See Screen #2).

Question 41

Angie has suffered an automobile physical damage loss. All of the following are the insured’s duties after a loss under Angie’s Personal Automobile policy, EXCEPT:

Answer Choices: Select the Correct Answer
Take reasonable steps after the loss to protect the property from further damage.
Promptly notify the police if the vehicle is stolen.
Allow the insurer to inspect and appraise the damaged property.
Facilitate the repairs to the vehicle and submit the invoice to the insurer.

Answer 41

Facilitate the repairs to the vehicle and submit the invoice to the insurer. is correct.

EXPLANATION:
The insured is not permitted to make repairs on the vehicle until after the vehicle has been inspected and/or appraised and an agreement as to the damages has been reached with the insurer.

Question 42

After a standard Personal Automobile policy has been in effect for more than 60 days, the insurer may cancel the policy for all of the following reasons, EXCEPT:

Answer Choices: Select the Correct Answer
Non-payment of premium.
Material misrepresentation in obtaining the policy.
A regular operator of the vehicle has had his driver’s license suspended or revoked.
A regular operator of the vehicle has received a citation for speeding.

Answer 42

A regular operator of the vehicle has received a citation for speeding. is correct.

EXPLANATION:
A standard Personal Automobile policy cannot be cancelled because a regular operator of the vehicle has received a citation for speeding. The policy CAN be cancelled for the reasons listed in all three of the other answer choices.

Question 43

Lindsay is covered under a standard, unendorsed Personal Auto policy. He has an external hard drive connected to the manufacturer-installed stereo system of the car, with thousands of digital music files stored there. The vehicle is broken into and the hard drive is stolen. How will the insurance company handle the claim for the hard drive?

Answer Choices: Select the Correct Answer
Deny the claim in full because this loss is excluded by Part D of the policy.
Pay the claim in full because Part D of the policy provides open peril coverage.
Pay the claim because the drive was being used with a stereo system that was permanently installed by the manufacturer.
Pay the claim up to the Part D specified limit of $1,000.

Answer 43

Deny the claim in full because this loss is excluded by Part D of the policy. is correct.

EXPLANATION:
These items are specifically excluded under the policy, therefore the claim would be denied. There is an endorsement that can be added to the policy for an additional premium to cover these types of items, but the question did not specify that this endorsement was carried in our example.

Question 44

A vehicle rolled over while exiting the interstate. The insured carries collision coverage with a $1,000 deductible and other than collision coverage with a $500 deductible. The damage to the vehicle is $2,000. What amount is the insurer responsible to pay?

Answer Choices: Select the Correct Answer
$2,000.
$1,000.
$1,500.
Nothing.

Answer 44

The correct answer is: $1,000.

EXPLANATION:
A vehicle that rolls over and sustains damage is considered to be a collision claim versus an other than collision claim. The damage to the vehicle is $2,000 and the deductible is $1,000. Therefore, the insurer is liable for $1,000.

Question 45

Jerry’s car is involved in an accident that has left him without a vehicle to drive. How much, if any, can he collect for his transportation expenses under Part D of his policy?

Answer Choices: Select the Correct Answer
Nothing as it was not stolen.
$20 per day after a 48 hour waiting period.
$20 per day after a 24 hour waiting period.
$30 per day after a 48 hour waiting period.

Answer 45

The correct answer is: $20 per day after a 24 hour waiting period.

EXPLANATION:
Transportation expenses are an additional coverage if the insured has purchased collision and/or other than collision coverage. $20 per day up to $600 is available. Coverage begins 48 hours after a theft loss and 24 hours for any other covered loss.

Question 46

Which of the following is the policy territory as described in the standard Personal Automobile policy?

Answer Choices: Select the Correct Answer
The United States, its territories and possessions, Puerto Rico and Canada.
The United States, its territories and possessions, Mexico, Puerto Rico and Canada.
The United States, its territories and possessions and Canada.
The United States, its territories and possessions, Mexico and Canada.

Answer 46

The correct answer is: The United States, its territories and possessions, Puerto Rico and Canada.

EXPLANATION:
The policy territory for the standard Personal Automobile policies includes the United States, its territories and possessions, Puerto Rico and Canada. Covered automobiles are also insured while being transported between territorial ports.

Question 47

An insured owns a motorcycle and a motor home. What endorsement can be added to the Personal Auto policy to provide coverage?

Answer Choices: Select the Correct Answer
Recreational Vehicle endorsement.
Miscellaneous Type Vehicle endorsement.
Joint Ownership endorsement.
Coverage for Excluded Equipment endorsement.

Answer 47

Miscellaneous Type Vehicle endorsement. is correct.

EXPLANATION:
The “miscellaneous type vehicle” endorsement is added for these types of recreational vehicles. Note that ISO has a separate endorsement for snowmobiles.

Question 48

All of the following statements are TRUE regarding the endorsement to the Personal Automobile policy for “Sound Receiving and Transmitting Equipment”, EXCEPT:

Answer Choices: Select the Correct Answer
For coverage to apply under the endorsement, the equipment must be installed in the area indicated by the manufacturer.
For coverage to apply, the equipment must be permanently installed in the vehicle.
The endorsement does not include a deductible.
Coverage would apply for a stereo or radio.

Answer 48

The correct answer is: For coverage to apply under the endorsement, the equipment must be installed in the area indicated by the manufacturer.

EXPLANATION:
The answer choice that is NOT TRUE is: “For coverage to apply under the endorsement, the equipment must be installed in the area indicated by the manufacturer.”

Question 49

Under the Limited Mexico coverage endorsement for auto insurance, losses are covered as long as they occur:

Answer Choices: Select the Correct Answer
Within 25 miles of the U.S. border.
Within 100 miles of the U.S. border.
Within 50 miles of the U.S. border.
Anywhere in Mexico.

Answer 49

Within 25 miles of the U.S. border. is correct.

EXPLANATION:
Coverage applies within 25 miles of the U.S. border. However, the insured is not covered if they injure a citizen of Mexico. The insured is not covered if a resident or citizen of Mexico is driving the car.

Question 50

The attachment of the “Miscellaneous Type Vehicle” endorsement to a Personal Automobile policy amends:

Answer Choices: Select the Correct Answer
The limits of liability for Part A.
The definitions of “your covered auto” and “newly acquired auto”.
The definitions of “your covered auto” and “the insured”.
The territory where PAP coverage will apply.

Answer 50

The correct answer is: The definitions of “your covered auto” and “the insured”.

EXPLANATION:
The attachment of the “Miscellaneous Type Vehicle” endorsement to a Personal Automobile policy amends the definitions of “your covered auto” and “the insured”.

Question 51

Rick lives in a major metropolitan city and does not own a car because he takes public transportation. However, when Rick leaves the city to visit his friend Bob, he often drives Bob’s car. Rick feels he should have some type of liability insurance to provide coverage when he is driving. Rick should purchase:

Answer Choices: Select the Correct Answer
Drive Other Car coverage.
Named Nonowner coverage.
Individual Named Insured coverage.
Extended Nonowned coverage.

Answer 51

Named Nonowner coverage. is correct.

EXPLANATION:
The Named Nonowner Coverage endorsement would provide Rick with liability coverage (along with Medical Payments & Uninsured Motorist) while driving a nonowned (borrowed or rented) vehicle.

Question 52

Bill Mathews works for a company that has provided him with a company car. He is permitted to use the vehicle for personal use. To be properly covered, what coverage should his agent add to his personal auto policy?

Answer Choices: Select the Correct Answer
The Extended Nonowned Liability Coverage endorsement.
The Nonowned Vehicle Liability Coverage endorsement.
The Drive Other Car Coverage endorsement.
The Named Nonowner Coverage endorsement.

Answer 52

The correct answer is: The Extended Nonowned Liability Coverage endorsement.

EXPLANATION:
Nonowned, furnished vehicles for use by an insured are excluded for coverage under the personal auto policy. This endorsement provides coverage while driving a nonowned furnished vehicle.

Question 53

Bruce works for Better Burger, Inc. As part of his compensation package, he is supplied with a company vehicle which he is allowed to take home each evening. Bruce wants to make sure that the liability coverage under his personal auto policy covers him while driving the company car. What endorsement should Bruce have added to his policy?

Answer Choices: Select the Correct Answer
The Nonowned Vehicle Liability Coverage endorsement.
The Drive Other Car Coverage endorsement.
The Named Nonowner Coverage endorsement.
The Extended Nonowned Liability Coverage endorsement.

Answer 53

The Extended Nonowned Liability Coverage endorsement. is correct.

EXPLANATION:
The personal auto policy excludes coverage for the regular use of a nonowned auto. The “extended non-owned liability coverage” endorsement should be added for an additional premium.