Question 1

All of the following are considered to be a covered auto under the Personal Auto Policy EXCEPT

Accepted Answer

A) a trailer owned by the insured. 
B) a temporary substitute auto loaned to the insured while her care is being repaired. 
C) a motorcycle owned by the insured. 
D) a newly acquired auto. 
A) a trailer owned by the insured. 
B) a temporary substitute auto loaned to the insured while her care is being repaired. 
C) a motorcycle owned by the insured. 
D) a newly acquired auto.

Question 2

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 3

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 4

After the Personal Auto Policy has been in force for 60 days (or is a renewal policy),all of the following are grounds for the insurer to cancel the policy EXCEPT

Accepted Answer

A) nonpayment of premiums 
B) the insured's license to drive is suspended 
C) the insurer discovers material misrepresentation by the insured in the application process 
D) the insured received a traffic ticket 
A) nonpayment of premiums 
B) the insured's license to drive is suspended 
C) the insurer discovers material misrepresentation by the insured in the application process 
D) the insured received a traffic ticket

Question 5

Owen's car is insured under a Personal Auto Policy (PAP).A hail storm occurred one evening,and his car was severely damaged.Which PAP coverage,if Owen purchased it,would cover this damage to his auto?

Accepted Answer

A) property damage liability 
B) uninsured motorists property damage 
C) collision 
D) other-than-collision 
A) property damage liability 
B) uninsured motorists property damage 
C) collision 
D) other-than-collision

Question 6

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

Question 7

Dan picked up his friend Rodney to drive to their softball game.Both Dan and Rodney have a Personal Auto Policy (PAP)with $5,000 of medical payments coverage.Dan hit a parked car,and Rodney was injured,incurring $9,000 of medical expenses.How will this claim be settled under the other insurance provision of the PAP?

Accepted Answer

A) Both insurers will pay $4,500. 
B) Dan's insurer will pay $5,000 and Rodney's insurer will pay $4,000. 
C) Dan's insurer will pay $4,000 and Rodney's insurer will pay $5,000. 
D) Dan's insurer will pay $3,000,Rodney's insurer will pay $3,000,and Rodney must pay $3,000 out of his own pocket. 
A) Both insurers will pay $4,500. 
B) Dan's insurer will pay $5,000 and Rodney's insurer will pay $4,000. 
C) Dan's insurer will pay $4,000 and Rodney's insurer will pay $5,000. 
D) Dan's insurer will pay $3,000,Rodney's insurer will pay $3,000,and Rodney must pay $3,000 out of his own pocket.

Question 8

The purpose of gap insurance is to

Accepted Answer

A) pay the difference between the bodily injury liability limit purchased and the actual amount of bodily injury liability if it exceeds the limit. 
B) pay the difference between the amount the insurer pays if a car is a total loss and the remaining amount owed on a lease or car loan. 
C) pay the difference between the medical payments coverage limit and the actual medical expenses of injured family members or passengers in the insured auto. 
D) pay the difference between the uninsured motorists coverage limit and the actual amount of the medical expenses incurred by the insured. 
A) pay the difference between the bodily injury liability limit purchased and the actual amount of bodily injury liability if it exceeds the limit. 
B) pay the difference between the amount the insurer pays if a car is a total loss and the remaining amount owed on a lease or car loan. 
C) pay the difference between the medical payments coverage limit and the actual medical expenses of injured family members or passengers in the insured auto. 
D) pay the difference between the uninsured motorists coverage limit and the actual amount of the medical expenses incurred by the insured.

Question 9

Gary purchased a Personal Auto Policy (PAP)that included collision coverage.Gary lost control of his vehicle on an icy road.He slid off the road and hit a tree.Ignoring any deductible,what is the insurer's liability for damage to Gary's car?

Accepted Answer

A) the greater of the actual cash value or the amount necessary to repair or replace the vehicle 
B) the replacement cost of the vehicle 
C) the lesser of the actual cash value or the amount necessary to repair or replace the vehicle 
D) the original purchase price of the vehicle 
A) the greater of the actual cash value or the amount necessary to repair or replace the vehicle 
B) the replacement cost of the vehicle 
C) the lesser of the actual cash value or the amount necessary to repair or replace the vehicle 
D) the original purchase price of the vehicle

Question 10

Duties of an insured after a collision loss covered under the PAP include which of the following?
I.Take reasonable steps to protect the vehicle from further damage.
II.Admit fault if the insured believes he or she caused the collision.

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 11

In addition to providing coverage in the United States,its territories and possessions,and Puerto Rico,where else does the PAP provide coverage?

Accepted Answer

A) in Mexico 
B) in Canada 
C) in both Mexico and Canada 
D) anywhere in the world 
A) in Mexico 
B) in Canada 
C) in both Mexico and Canada 
D) anywhere in the world

Question 12

Patricia purchased a Personal Auto Policy (PAP).Her car was rear-ended by a driver who fled the scene.Patricia suffered whiplash,migraine headaches,and she was unable to work.Which of the following coverages will cover her lost work earnings?

Accepted Answer

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

Question 13

All of the following statements about the termination provisions of the PAP are true EXCEPT

Accepted Answer

A) The insured can cancel the policy for any reason. 
B) The insurer can cancel a newly-written policy if it has been in force for fewer than 60 days. 
C) The insurer can cancel the policy after it has been in force for 60 days only if the insured has three or more traffic violations. 
D) The insurer can refuse to renew the policy at its annual anniversary date as long as proper notice is given prior to the end of the policy period. 
A) The insured can cancel the policy for any reason. 
B) The insurer can cancel a newly-written policy if it has been in force for fewer than 60 days. 
C) The insurer can cancel the policy after it has been in force for 60 days only if the insured has three or more traffic violations. 
D) The insurer can refuse to renew the policy at its annual anniversary date as long as proper notice is given prior to the end of the policy period.

Question 14

Which of the following statements about the medical payments coverage of the PAP is true?

Accepted Answer

A) The amount of the benefit typically is $100,000. 
B) Covered expenses must be incurred within 30 days of the accident. 
C) Covered expenses include the cost of funeral services. 
D) The benefit limit applies on a per-accident basis rather than on a per-person basis. 
A) The amount of the benefit typically is $100,000. 
B) Covered expenses must be incurred within 30 days of the accident. 
C) Covered expenses include the cost of funeral services. 
D) The benefit limit applies on a per-accident basis rather than on a per-person basis.

Question 15

All of the following are considered to be uninsured vehicles for purposes of the uninsured motorists coverage of the PAP EXCEPT

Accepted Answer

A) a vehicle owned by an individual who is insured,but for less than the amount required by the state's financial responsibility law. 
B) a hit-and-run vehicle,the ownership of which cannot be determined. 
C) a vehicle owned by an individual who purchased just enough liability insurance to satisfy the state's financial responsibility law. 
D) a vehicle insured by a company which becomes insolvent before a claim can be paid. 
A) a vehicle owned by an individual who is insured,but for less than the amount required by the state's financial responsibility law. 
B) a hit-and-run vehicle,the ownership of which cannot be determined. 
C) a vehicle owned by an individual who purchased just enough liability insurance to satisfy the state's financial responsibility law. 
D) a vehicle insured by a company which becomes insolvent before a claim can be paid.

Question 16

Under the Personal Auto Policy,which of the following statements is true concerning transportation network platforms through which drivers are connected with passengers for pre-arranged transportation for a fee?
I.Liability arising out of operating a vehicle while using the vehicle for such pre-arranged travel for a fee is excluded.
II.Medical payments coverage does not apply if the injuries occur while using the vehicle for pre-arranged travel for a fee through a transportation network platform.

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 17

Which of the following statements concerning the collision damage waiver when renting an auto is true?
I.It relieves the renter from legal liability to third parties arising out of operation of the rented car.
II.It relieves the renter from legal liability for the vehicle if it is damaged or stolen.

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 18

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 19

The appraisal provision in the Personal Auto Policy is used to determine the

Accepted Answer

A) value of a loss payable under property damage liability. 
B) amount paid for a physical damage loss to the insured's auto if the insured and insurer disagree. 
C) amount of auto insurance that should be purchased for an older/antique car. 
D) value of the loss payable under the medical payments coverage. 
A) value of a loss payable under property damage liability. 
B) amount paid for a physical damage loss to the insured's auto if the insured and insurer disagree. 
C) amount of auto insurance that should be purchased for an older/antique car. 
D) value of the loss payable under the medical payments coverage.

Question 20

Tony has an unendorsed Personal Auto Policy 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

Exam 20: Auto Insurance

All of the following are considered to be a covered auto under the Personal Auto Policy EXCEPT

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

After the Personal Auto Policy has been in force for 60 days (or is a renewal policy),all of the following are grounds for the insurer to cancel the policy EXCEPT

Owen's car is insured under a Personal Auto Policy (PAP).A hail storm occurred one evening,and his car was severely damaged.Which PAP coverage,if Owen purchased it,would cover this damage to his auto?

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.

The purpose of gap insurance is to

Gary purchased a Personal Auto Policy (PAP)that included collision coverage.Gary lost control of his vehicle on an icy road.He slid off the road and hit a tree.Ignoring any deductible,what is the insurer's liability for damage to Gary's car?

Duties of an insured after a collision loss covered under the PAP include which of the following? I.Take reasonable steps to protect the vehicle from further damage. II.Admit fault if the insured believes he or she caused the collision.

In addition to providing coverage in the United States,its territories and possessions,and Puerto Rico,where else does the PAP provide coverage?

Patricia purchased a Personal Auto Policy (PAP).Her car was rear-ended by a driver who fled the scene.Patricia suffered whiplash,migraine headaches,and she was unable to work.Which of the following coverages will cover her lost work earnings?

All of the following statements about the termination provisions of the PAP are true EXCEPT

Which of the following statements about the medical payments coverage of the PAP is true?

All of the following are considered to be uninsured vehicles for purposes of the uninsured motorists coverage of the PAP EXCEPT

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

The appraisal provision in the Personal Auto Policy is used to determine the

Risk and Its Treatment

Insurance and Risk

Introduction to Risk Management

Enterprise Risk Management

Types of Insurers and Marketing Systems

Insurance Company Operations

Financial Operations of Insurers

Government Regulation of Insurance

Fundamental Legal Principles

Analysis of Insurance Contracts

Life Insurance

Life Insurance and Contractual Provisions

Buying Life Insurance

Annuities and Individual Retirement Accounts

Health-Care Reform;individual Health Insurance Coverages

Employee Benefits: Group Life and Health Insurance

Employee Benefits: Retirement Plans

Social Insurance

The Liability Risk

Auto Insurance Continued

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Homeowners Insurance,section II

Other Property and Liability Insurance Coverages

Commercial Property Insurance

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