Question 1

All of the following are covered as supplementary payments under the liability section of the PAP EXCEPT

Accepted Answer

A) the cost of an appeal bond in a lawsuit stemming from an auto accident. 
B) the cost of a bail bond for a traffic violation when no accident is involved. 
C) interest which accrues on a liability judgment covered by the policy. 
D) reasonable expenses incurred by the insured to testify at a trial involving a lawsuit covered by the policy. 
A) the cost of an appeal bond in a lawsuit stemming from an auto accident. 
B) the cost of a bail bond for a traffic violation when no accident is involved. 
C) interest which accrues on a liability judgment covered by the policy. 
D) reasonable expenses incurred by the insured to testify at a trial involving a lawsuit covered by the policy.

Question 2

Tony has a PAP which provides medical payments coverage.Under which of the following circumstances would the injured person be eligible for benefits under Tony's policy?
I.A friend in the car is injured while Tony is driving a covered auto.
II.A passenger on a motorcycle driven by Tony is injured when Tony hit another vehicle.

Accepted Answer

A) I only 
B) II only 
C) both I and II 
D) neither I nor II 
A) I only 
B) II only 
C) both I and II 
D) neither I nor II

Question 3

Which of the following statements about the uninsured motorists coverage of the PAP is true?

Accepted Answer

A) The coverage usually applies only to property damage. 
B) The coverage applies only if the uninsured motorist is legally liable. 
C) Unless higher amounts are purchased,the maximum benefit is normally limited to $1,000. 
D) A covered person's only recourse is to sue the insurer if there is a disagreement over the amount of damages. 
A) The coverage usually applies only to property damage. 
B) The coverage applies only if the uninsured motorist is legally liable. 
C) Unless higher amounts are purchased,the maximum benefit is normally limited to $1,000. 
D) A covered person's only recourse is to sue the insurer if there is a disagreement over the amount of damages.

Question 4

Which of the following statements about the Miscellaneous-Type Vehicle Endorsement to the PAP is (are)true?
I.It provides bodily injury liability coverage for any vehicle rented by the insured.
II.To lower premiums when a motorcycle is insured,bodily injury to passengers can be excluded.

Accepted Answer

A) I only 
B) II only 
C) both I and II 
D) neither I nor II 
A) I only 
B) II only 
C) both I and II 
D) neither I nor II

Question 5

A vehicle is considered a constructive total loss when

Accepted Answer

A) it cannot be repaired. 
B) the repair cost exceeds the actual cash value. 
C) it can be repaired,but the insured prefers a cash settlement. 
D) it can be repaired,but the insurer prefers a cash settlement. 
A) it cannot be repaired. 
B) the repair cost exceeds the actual cash value. 
C) it can be repaired,but the insured prefers a cash settlement. 
D) it can be repaired,but the insurer prefers a cash settlement.

Question 6

In which of the following situations would medical payments be paid under an unendorsed PAP?

Accepted Answer

A) injuries incurred while riding a motorcycle 
B) injuries incurred while an auto is being used without the presumption that permission would have been granted to use the auto 
C) injuries incurred in an auto while it is used in a share-the-expense car pool 
D) injuries incurred during the course of employment if workers compensation benefits are available 
A) injuries incurred while riding a motorcycle 
B) injuries incurred while an auto is being used without the presumption that permission would have been granted to use the auto 
C) injuries incurred in an auto while it is used in a share-the-expense car pool 
D) injuries incurred during the course of employment if workers compensation benefits are available

Question 7

If the value of a vehicle is increased after repairs,such as repainting an entire auto when only one fender or door is damaged,the insurer will not pay for the increase in value.Another name for the increase in value is

Accepted Answer

A) diminution. 
B) betterment. 
C) appraisal. 
D) subrogation. 
A) diminution. 
B) betterment. 
C) appraisal. 
D) subrogation.

Question 8

The purpose of the Miscellaneous-Type Vehicle Endorsement to the PAP is to

Accepted Answer

A) add coverage for newly-acquired autos. 
B) provide coverage for when the insured is using someone else's auto with the permission of the owner. 
C) insure motorcycles,mopeds,motor scooters,and similar vehicles. 
D) provide coverage for when the insured is using someone else's auto without the permission of the owner. 
A) add coverage for newly-acquired autos. 
B) provide coverage for when the insured is using someone else's auto with the permission of the owner. 
C) insure motorcycles,mopeds,motor scooters,and similar vehicles. 
D) provide coverage for when the insured is using someone else's auto without the permission of the owner.

Question 9

The purpose of the collision damage waiver when renting an auto is to

Accepted Answer

A) relieve the renter of financial responsibility if the rented car is damaged or stolen. 
B) relieve the renter of legal liability to third parties arising out of operation of the rented car. 
C) relieve the renter's insurer of legal liability to third parties arising out of operation of the rented car. 
D) waive the insured's deductible if the rented car is damaged or stolen. 
A) relieve the renter of financial responsibility if the rented car is damaged or stolen. 
B) relieve the renter of legal liability to third parties arising out of operation of the rented car. 
C) relieve the renter's insurer of legal liability to third parties arising out of operation of the rented car. 
D) waive the insured's deductible if the rented car is damaged or stolen.

Question 10

Sarah purchased a Personal Auto Policy with liability limits of 50/100/25.Sarah ran a stop sign and hit a van.The van sustained $15,000 in damages.The following bodily injuries were suffered by passengers in the van: Passenger #1,$15,000; Passenger #2,$60,000; and Passenger #3,$10,000.Sarah sustained $5,000 in medical expenses,and Sarah's car sustained $10,000 in damages.How much will Sarah's insurer pay under Part A: Liability Coverage?

Accepted Answer

A) $90,000 
B) $100,000 
C) $115,000 
D) $125,000 
A) $90,000 
B) $100,000 
C) $115,000 
D) $125,000

Question 11

Which of the following is considered to be a collision loss under Part D (coverage for damage to your auto)of the PAP?

Accepted Answer

A) The covered auto was damaged when the car hit a deer. 
B) The covered auto is vandalized by a thief after it is stolen. 
C) The covered auto is damaged when it slid off an icy road and hit a fence. 
D) The covered auto is damaged by a fire after the engine overheated. 
A) The covered auto was damaged when the car hit a deer. 
B) The covered auto is vandalized by a thief after it is stolen. 
C) The covered auto is damaged when it slid off an icy road and hit a fence. 
D) The covered auto is damaged by a fire after the engine overheated.

Question 12

Which of the following persons is (are)insured under the uninsured motorists coverage of the PAP?
I.A pedestrian struck by a covered auto if he or she has no insurance to pay medical expenses
II.The spouse of a named insured who is killed by an uninsured motorist

Accepted Answer

A) I only 
B) II only 
C) both I and II 
D) neither I nor II 
A) I only 
B) II only 
C) both I and II 
D) neither I nor II

Question 13

Which of the following statements about the payment of defense costs by the PAP is (are)true?
I.They are paid in addition to the policy limits.
II.They are payable even after the limit of liability is exhausted.

Accepted Answer

A) I only 
B) II only 
C) both I and II 
D) neither I nor II 
A) I only 
B) II only 
C) both I and II 
D) neither I nor II

Question 14

Angie was injured when her car was struck by a driver who ran a red light.The other driver carried the minimum liability coverage necessary to be considered financially responsible.Angie's injuries were $15,000 above the minimum bodily injury limit.There is a coverage that can be added to the PAP that applies when a negligent driver carries the minimum liability insurance required by the state,but is less than the insured's actual damages for bodily injury.This coverage is called

Accepted Answer

A) medical payments coverage. 
B) underinsured motorists coverage. 
C) bodily injury liability coverage. 
D) uninsured motorists coverage. 
A) medical payments coverage. 
B) underinsured motorists coverage. 
C) bodily injury liability coverage. 
D) uninsured motorists coverage.

Question 15

John has an auto which is covered for collision losses subject to a $250 deductible.Kate's auto also has collision coverage but her deductible is $500.Which of the following statements describes how a $2,000 collision loss will be paid if it occurs when John borrows Kate's car because his car is in the shop for repairs?

Accepted Answer

A) John's policy will pay $1,500,and Kate's policy will pay nothing. 
B) John's policy will pay $1,750,and Kate's policy will pay nothing. 
C) Kate's policy will pay $1,750,and John's policy will pay nothing. 
D) Kate's policy will pay $1,500,and John's policy will pay $250. 
A) John's policy will pay $1,500,and Kate's policy will pay nothing. 
B) John's policy will pay $1,750,and Kate's policy will pay nothing. 
C) Kate's policy will pay $1,750,and John's policy will pay nothing. 
D) Kate's policy will pay $1,500,and John's policy will pay $250.

Question 16

All of the following losses are excluded under Part D (coverage for damage to your auto)of an unendorsed PAP EXCEPT

Accepted Answer

A) vandals damaged a portable cell phone kept in the car. 
B) theft of a compact disc player which was permanently installed in the auto. 
C) damage caused to a car's engine because the named insured never changed the oil. 
D) destruction of a radar detector which overheated and caught on fire. 
A) vandals damaged a portable cell phone kept in the car. 
B) theft of a compact disc player which was permanently installed in the auto. 
C) damage caused to a car's engine because the named insured never changed the oil. 
D) destruction of a radar detector which overheated and caught on fire.

Question 17

John occasionally borrows the car of his friend,Sophie.Sophie has a PAP with liability limits of 100/300/50.John also has a PAP,and his liability limits 250/500/50.John had an accident while using Sophie's car and was found to be legally liable for $300,000 in bodily injury liability for injuries suffered by one person.How much will be paid by each policy?

Accepted Answer

A) Sophie's policy will pay $150,000,John's policy will pay $150,000. 
B) Sophie's policy will pay $50,000,John's policy will pay $250,000. 
C) Sophie's policy will pay $100,000,John's policy will pay $200,000. 
D) John's policy will pay the entire amount. 
A) Sophie's policy will pay $150,000,John's policy will pay $150,000. 
B) Sophie's policy will pay $50,000,John's policy will pay $250,000. 
C) Sophie's policy will pay $100,000,John's policy will pay $200,000. 
D) John's policy will pay the entire amount.

Question 18

All of the following are covered autos under the liability section of the PAP EXCEPT

Accepted Answer

A) a nonowned van which is driven by the insured on a regular basis. 
B) a trailer owned by the named insured. 
C) a borrowed auto used by the insured as a substitute for a stolen covered auto. 
D) a newly acquired auto which replaces a vehicle previously described in the policy. 
A) a nonowned van which is driven by the insured on a regular basis. 
B) a trailer owned by the named insured. 
C) a borrowed auto used by the insured as a substitute for a stolen covered auto. 
D) a newly acquired auto which replaces a vehicle previously described in the policy.

Question 19

Which of the following statements about the liability limits of the PAP is (are)true?
I.The policy can be written with split limits of liability.
II.Prejudgment interest is considered part of the damage award and is subject to the policy limit of liability.

Accepted Answer

A) I only 
B) II only 
C) both I and II 
D) neither I nor II 
A) I only 
B) II only 
C) both I and II 
D) neither I nor II

Question 20

Which of the following statements is (are)true with respect to the collision damage waiver on rented cars?
I.It is inexpensive and is provided at no charge by most rental car companies.
II.It waives the renter's liability for bodily injury liability arising out of use of the rented auto.

Accepted Answer

A) I only 
B) II only 
C) both I and II 
D) neither I nor II 
A) I only 
B) II only 
C) both I and II 
D) neither I nor II

Exam 22: Auto Insurance

All of the following are covered as supplementary payments under the liability section of the PAP EXCEPT

Which of the following statements about the uninsured motorists coverage of the PAP is true?

Which of the following statements about the Miscellaneous-Type Vehicle Endorsement to the PAP is (are)true? I.It provides bodily injury liability coverage for any vehicle rented by the insured. II.To lower premiums when a motorcycle is insured,bodily injury to passengers can be excluded.

A vehicle is considered a constructive total loss when

In which of the following situations would medical payments be paid under an unendorsed PAP?

If the value of a vehicle is increased after repairs,such as repainting an entire auto when only one fender or door is damaged,the insurer will not pay for the increase in value.Another name for the increase in value is

The purpose of the Miscellaneous-Type Vehicle Endorsement to the PAP is to

The purpose of the collision damage waiver when renting an auto is to

Which of the following is considered to be a collision loss under Part D (coverage for damage to your auto)of the PAP?

Which of the following persons is (are)insured under the uninsured motorists coverage of the PAP? I.A pedestrian struck by a covered auto if he or she has no insurance to pay medical expenses II.The spouse of a named insured who is killed by an uninsured motorist

Which of the following statements about the payment of defense costs by the PAP is (are)true? I.They are paid in addition to the policy limits. II.They are payable even after the limit of liability is exhausted.

All of the following losses are excluded under Part D (coverage for damage to your auto)of an unendorsed PAP EXCEPT

All of the following are covered autos under the liability section of the PAP EXCEPT

Which of the following statements about the liability limits of the PAP is (are)true? I.The policy can be written with split limits of liability. II.Prejudgment interest is considered part of the damage award and is subject to the policy limit of liability.

Which of the following statements is (are)true with respect to the collision damage waiver on rented cars? I.It is inexpensive and is provided at no charge by most rental car companies. II.It waives the renter's liability for bodily injury liability arising out of use of the rented auto.

Risk and Its Treatment

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Introduction to Risk Management

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Types of Insurers and Marketing Systems

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Government Regulation of Insurance

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Analysis of Insurance Contracts

Life Insurance

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Buying Life Insurance

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Health-Care Reform; Individual Health Insurance Coverages

Employee Benefits: Group Life and Health Insurance

Employee Benefits: Retirement Plans

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