Unit 8: Personal Auto Insurance

Question 1

Casualty Coverages

Answer 1

• Liability
• Medical payments
• Uninsured/underinsured motorists

Question 2

Property Coverages

Answer 2

• Collision
• Other than Collision (comprehensive)

Question 3

You and your

Answer 3

Refer to the named insured shown in the declarations and the named insured’s spouse (must reside in same house)

Question 4

Family member

Answer 4

Any person related to the named insured or spouse who is a resident of the named insured’s household. Includes those related by blood, marriage, or adoption and includes a ward or foster child

Question 5

Bodily injury

Answer 5

Bodily harm, sickness, or disease, including resulting death

Question 6

Occupying

Answer 6

• in a vehicle
• upon a vehicle
• getting into, onto, out of, or off a vehicle

Question 7

Property damage

Answer 7

Physical injury to, destruction of, or loss of use of tangible property

Question 8

Covered auto

Answer 8

Includes private passenger autos, which are four-wheeled motor vehicles and pickup trucks, and vans that are under a certain weight and are not used for business purposes. Vehicles must be owned or leased under a long-term contract of six months or more

Question 9

Termination Provision

Answer 9

• Insured may cancel at any time
• Insurer must provide written notice of cancellation or nonrenewal

Question 10

Policy Period and Policy Territory

Answer 10

Policy period: shown in the declarations; accidents and losses only applicable during this period

Policy Territory: US, its territories and possessions, Puerto Rico, and Canada

Question 11

Assigned Risk Plans

Answer 11

• High-risk insureds
• Assigned to an insurance company
• Usually only liability coverage

Question 12

Insureds

Answer 12

• Named insured and resident spouse
• Resident family members
• Any person who borrows a covered auto with the permission of any insured

Question 13

Supplementary (Additional) Payments

Answer 13

BAILED

• Bonds
• Aid
• Interest on judgments or appeals
• Loss of earnings
• Expenses
• Defense attorney cost

Question 14

Liability Exclusions

Answer 14

• Intentional injury or damage
• Injury to an insured
• Damage to property owned or transported by an insured
• Injury to an employee
• Using the vehicle as a taxi (carpool is ok)
• Using the vehicle without permission
• Vehicles less than four wheels or not licensed for road use
• Vehicles used for racing

Question 15

Limits of Liability

Answer 15

• Split limits (separate limits for bodily injury and property damage)
• Combined single limit
• Limits vary by state

Question 16

Financial Responsibility Laws

Answer 16

• State-required proof of ability to pay for damages
• Usually mandated auto liability insurance

Question 17

Out-of-State Liability Coverage

Answer 17

Higher of

• policy limits
• other state’s required limits

Question 18

Other Insurance

Answer 18

• Pro rata share
• (policy limits / total limits) x loss
• If driving a nonowned: the auto is primary coverage; insured’s policy is excess (if needed)

Question 19

Medical Payments (aka First-Party Benefits)

Answer 19

• Covers medical and funeral expense
• No fault (insured, family and guests while occupying any vehicle)
• Occupying (in, on, or getting in, out, or off)
• Also covers insured and family as a pedestrian

Question 20

Medical Payments Exclusions

Answer 20

• Sustained while occupying a motor vehicle with fewer than four wheels
• Sustained while using a covered auto as a public or livery conveyance
• Losses covered under workers’ compensation
• Sustained while the insured is occupying a vehicle without the reasonable belief that he is entitled to do so
• Sustained while occupying a vehicle that is being used in the insured’s business
• Sustained during prearranged racing or speed event

Question 21

Limits of Liability

Answer 21

Single limit of liability applies to each person injured

Question 22

Other Insurance

Answer 22

If medical bills are paid by the insureds liability policy, they will not be paid again

Question 23

Uninsured Motorists

Answer 23

• Has no liability insurance at the time of the accident
• Has liability limits lower than the state requirements
• Is a hit-and-run driver
• Insurance company insolvent
• Insurance company denies coverage
• Uninsured driver is at fault
• Covers: insured, family, guest passenger

Question 24

Subrogation

Answer 24

Insurance company can sue the at-fault party

Question 25

Limits of Uninsured Motorists

Answer 25

- Can be split or combined single limit - Usually can't be greater than insured's liability limits

Question 26

Other Insurance

Answer 26

- Limited to the highest single policy limit for uninsured motorists coverage - Prevents stacking of limits

Question 27

Underinsured Motorists Coverage

Answer 27

- Pays when the at-fault driver has liability insurance - Liability is less than the injured, family or guest passengers' bodily injury

Question 28

Appraisal

Answer 28

A settlement option regarding value of loss disputes - Insured and insurer each select an appraiser - Each party pays cost of its own appraiser - Two appraisers then select an umpire - Cost of the umpire split between the two parties - Amount agreed upon by two out of the three is amount paid for the loss

Question 29

Newly Acquired Auto

Answer 29

Automatically has the same coverage as current covered autos for 14 days; must be specifically added within those 14 days

Question 30

Collision and Other Than Collision

Answer 30

For newly acquired auto - If coverage is already on the policy, report within 14 days - If no coverage, must request coverage within 4 days - If loss occurs within first four days and insured has complied with notification, $500 deductible will apply

Question 31

Physical Damage to Your Auto

Answer 31

Covers insured's vehicle and nonowned vehicles Collision: contact with another object; overturn Other than Collision (Comprehensive) - Missiles or falling objects - Fire - Theft or larceny - Windstorm - Hail, water, or flood - Malicious mischief or vandalism - Riot or civil commotion - Contact with a bird or animal - Breakage of Glass Doesn't cover any personal property in the vehicle

Question 32

Transportation Expense

Answer 32

- Covers temporary transportation expenses (rental car, bus, taxi, train) - $30/per day - 48-hour waiting period for theft losses - 24-hour waiting period all other type losses

Question 33

Damage to Your Auto Exclusions

Answer 33

- Auto used as a public or livery conveyance - Wear and tear, freezing, mechanical or electrical breakdown, or road damage to tires - Electronic equipment that reproduces, receives, or transmits audio, visual, or data signals - Tapes, records, disks, and other media used with electronic equipment - Destruction or confiscation by government or civil authorities - Custom furnishings or equipment in a pickup or van - Radar or laser detection equipment - Nonowned autos being used by any person engaged in an auto business - Autos being used in a prearranged racing or speed event

Question 34

Other Provisions

Answer 34

- The lesser of ACV, repair, or replace - Maximum of $1,500 for damage to a nonowned trailer - Maximum of $1,000 for electronic equipment permanently installed in an area not normally used by the manufacturer for this equipment - Collision and OTC (comprehensive) have deductibles - No benefit to bailee - Insured must allow company to inspect damage - Insured must notify police if vehicle is stolen

Question 35

Personal Auto Endorsements Joint ownership coverage

Answer 35

Insureds are not married or are unrelated

Question 36

Personal Auto Endorsements Towing and labor costs

Answer 36

- Covered auto is disabled - Labor must be performed at the place of disablement - Repair work is not covered

Question 37

Personal Auto Endorsements Miscellaneous type vehicles

Answer 37

- Motorcycles - Scooters - Golf carts - Motor homes

Question 38

Personal Auto Endorsements Extended nonowned coverage

Answer 38

Vehicles furnished or available for regular use - Covers insured and the family while driving nonowned autos on a regular basis

Question 39

Personal Auto Endorsements Named nonowner coverage

Answer 39

- Covers someone who does not own an automobile but may drive borrowed or rented autos - Only covers the person named in the endorsement