Unit 9

Question 1

Page 166
What is a Personal Auto Policy (PAP)?

Answer 1

auto insurance that covers both
- Property and liability (considered a package policy)

Question 2

Page 167
What are the 4 parts of the Personal Auto Policy (PAP)?

Answer 2

Part A - liability coverage
Part B - medical payments coverage
Part C - Uninsured motorists coverage
Part D - physical damage to YOUR auto

Many policies include all 4, but don’t have to purchase each one.

Question 3

Page 167
David, these are your handwritten notes

Answer 3

• Medical coverage is payment to you and those in your auto
• Medical payment is PIP (Personal Injury P—can’t read)

Question 4

Page 167
What is the Definitions section of PAP (Personal Auto Policy)?

Answer 4

certain key terms to clarify intent of vaious coverages and conditions

Question 5

Page 167
What does “you” and “your” refer to in policy?

Answer 5

the named insured person and his/her spouse

Question 6

Page 167
What is a “family member” in policy?

Answer 6

any person related to the insured who is a RESIDENT in the insured’s household. (related by blood, marriage, adoption, foster kid.)

Question 7

Page 168
What does the named insured’s auto coverage include?

Answer 7

any vehicle listed in Declaration

Vehicles that are eligible for auto insurance:
- private passenger autos (4 wheeled motor vehicles, pickup trucks, vans under certain weight, not used for business - farming/ranching not businesses)
* vehicles must be owned/leased under longterm contract - 6 months or more
- any auto, truck, van acquired during policy period (replacement/additional auto)
- trailer (named by insured)
- auto or trailer NOT owned by being used as a temporary substitute

Question 8

Page 169 (IMPORTANT, 3rd time on test)
What is liability coverage?

Answer 8

covers damage for bodily injury, property damage that you (the insured) caused due to an accident (you’re at fault, legally responsible)

Policy settles or defends claims or lawsuits made, and pays defense costs incurred by the co.

Question 9

Who is an insured under liability?

Answer 9

1. named insured, spouse or members of fam using ANY auto
   (16 year old son of the named insured causes accident while driving a neighbor’s car – kid is insured under the named insured - parents’ PAP)
2. Anyone using the insured car with insured’s permission
3. other people/organizations sharing liability with the insured - Vicarious liability
   (David, this was confusing. I searched the term on Forbes.com It applies to those in control of people who cause harm.
   Ex. This covers an employee driving a company vehicle and causes an accident.)

Question 10

Page 171 (and bottom of previous)

What are SUPPLEMENTARY Payments that are paid in addition to the policy’s limit of liability?

Answer 10

• up to $250K for cost of bail bonds
• premiums on appeal bonds or bonds to release attachments
• Postjudgment interest (prejudge interest included in part of liability premium
• Up to $200/day loss of income earnings if having to go to hearings/trials at company’s request
• expenses incurred by insured at company’s request (within reason)

Question 11

What is Excluded from liability section of PAP?

Answer 11

• BI (bodily injury), PD (property damage)
• BI cause to an insured’s employee (covered by worker’s comp)
• liability arising out of insured’s ownership or operation of vehicle for public transportation (i.e. if vehicle is used as a taxi)
• motorized vehicles less than 4 wheels or for use off road - does not apply to non-owned golf carts)

Question 12

Page 172
How is liability coverage provided?

Answer 12

“Split limits” basis in series of three #s (like 25/50/25) Means:
- $25K per person for BI
- $50K per accident
- $25K per accident for PD

(See page 172 for an example of a $250K judgment against an insured)

Can’t collect duplicate coverage under Part A and another coverage of PAP under Underinsured Motorists coverage

Question 13

Page 173
What is the Other Insurance Clause for Liability coverage?

Answer 13

company will pay only its share of a loss that is also covered by other insurance.
(You should read example on page.)

Question 14

Page 175
Uninsured Motorists (UM) coverage

Answer 14

(this coverage indemnifies (protects) the insured for BI only as a result of accident caused by a legally liable uninsured motorist)
- some states offer PD coverage to BI coverage by you have to add an “endorsement to the policy”

Question 15

Page 175/176
What is the policy definition of Uninsured Motor Vehicle

Answer 15

• vehicle has no liability coverage at time of accident
• has liability coverage but not enough to meet state’s requirement
• vehicle operated by a hit-and-run driver who can’t be identified who strikes the insured/family member. The insured’s insurance would cover it.

Question 16

Page 176/177
Part C Exclusions – does NOT cover?

Answer 16

You only highlighted one bullet
vehicle not covered when being used as public transportation (transporting people for hire)

Question 17

Page 177
What is Limit of Liability for Part C?

Answer 17

Insurance co will not pay any part of a loss that can be covered under workers’ comp or disability benefits law.

Question 18

Page 177
What is the Other Insurance provision for UM coverage?

Answer 18

Amount the insured can be paid is limited to highest single policy limit for UM coverage. No “stacking”

Question 19

Page 178 Coverage for damage to YOUR auto
Part D

What is Physical Damage coverage?

Answer 19

pays for direct and accidental loss to the insured’s auto or any non-owned auto against loss caused by:
- Collision
- Other than Collision (OTC or “Comprehensive”)

Question 20

Page 178
Define Collision

Answer 20

impact of an auto covered by the policy with another object/vehicle, or upset (flip/roll) of a vehicle.

Question 21

Page 178/179
What are “OTC” losses

Answer 21

direct, accidental loss to vehicle
- missiles (not military), or falling objects (trees, flying objects) that hit auto
- contact with bird/animal (yeah, deer :-)
(you left off several other bullets)

Question 22

Page 179 (faintly highlighted bracket)
What is coverage for Nonowned auto?

Answer 22

if an insured person has a covered loss in a non-owned auto, broadest coverage on any of his vehicles will apply to non-owned auto claim.

Question 23

Page 179
Transportation Expenses under Part D

What is Transportation Expenses coverage?

Answer 23

transportation expenses incurred by the insured due to PD of vehicle (i.e. rental car) Must have Collision and OTC coverage to get transportation expenses covered

Question 24

Page 180
What is the provision for theft of an auto?

Answer 24

48 hour waiting period before expenses will be paid

Question 25

Page 180/181
What does Part D exclude?

Answer 25

(you only highlighted one of MANY bullets)

-losses to audio/visual and data electronic equipment, radios, CD players, phones, personal computers, etc. (unless permanently installed in the auto and necessary for normal operation/monitoring of the auto)
- custom furnishing/equipment in pickup or van

Question 26

Page 181
How are physical damage (PD) losses reimbursed

Answer 26

reimbursed for actual cash value or amount needed to repair or replace property (whichever is less)

Question 27

Page 181
How are Collision and OTC coverage usually written?

Answer 27

with a deductible that applies separately to each occurrence.

Question 28

Page 182
Parts F – General Provisions
What are general provisions of auto policy?

Answer 28

policy only applies to accidents/losses occurring during policy period and policy territory. Only covered in US and territories/possessions, Puerto Rico, and Canada

Question 29

Page 183
What does UNDERinsured Motorists coverage do?

Answer 29

-pays the diff between the insured’s actual damages for BI and the amount of liability insurance carried by the other driver who is at fault.
(Buddy, it takes care of your expenses if you are hit by someone whose insurance is less than it should be)
- it is subject to state law
- it is added on to the PAP by an “endorsement”

Question 30

Page 183
Three PAP endorsements (there are 5, only 3 highlighted)
What is Towing And Labor Costs endorsement?

Answer 30

reimburses the insured for cost of having vehicle towed and any work done to it where it is disabled (not repair performed IN the garage after towed)

Question 31

Page 183
What is Miscellaneous Type Vehicle endorsement?

Answer 31

added to PAP to cover motorcycles, mopeds RVs, motor homes, golf carts

Question 32

Page 184
What is the Named Non-Owner coverage endorsement?

Answer 32

coverage issued to someone who does not own an auto but drives borrowed or rental autos.

Question 33

Page 184
What is No-Fault insurance (you wrote “Reparation Benefits”)?

Answer 33

an insured driver is reimbursed by his OWN insurance co for medical exp and loss of wages regardless of who’s at fault in auto accident

Question 34

Page 185
What are Assigned Risk Plans/Automobile Insurance Plans?

Answer 34

(a driver is a risk if they have poor driving records and cost more than insurance policies can dish out)

So, insurance cos with a state make voluntary agreements to share the risk of insuring these poor drivers. These risks are randomly assigned depending on the size of the insurance co, thus the name Assigned Risk Plan.

Most drivers in the Assigned Risk Plan only have the minimum BI (bodily injury) and PD (prop damage) liability coverage required by state law. Physical dam and medical payments coverage also issued sometimes.

Question 36

what does OTC stand for and what is it really?

Answer 36

Other than collison and it i really referring to comprehensive coverage.