Question 1

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 2

Which of the following statements is true about uninsured motorists coverage under the Personal Auto Policy?

Accepted Answer

A)  The benefits are paid without regard to fault. 
B)  The insured collects from his or her own insurer, and the insurer can recoup the loss payment from the other driver. 
C)  Uninsured motorists benefits are limited to the medical expenses of the insured. 
D)  Subrogation is never used when uninsured motorists benefits are paid. 
A)  The benefits are paid without regard to fault. 
B)  The insured collects from his or her own insurer, and the insurer can recoup the loss payment from the other driver. 
C)  Uninsured motorists benefits are limited to the medical expenses of the insured. 
D)  Subrogation is never used when uninsured motorists benefits are paid.

Question 3

A car damaged in an auto accident may have reduced market or resale value after it is repaired. Some insureds have sought to recover this reduction in market or resale value. This loss in value is called

Accepted Answer

A)  gap coverage. 
B)  betterment. 
C)  diminution. 
D)  subrogation. 
A)  gap coverage. 
B)  betterment. 
C)  diminution. 
D)  subrogation.

Question 4

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 5

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 6

Kelly was hit by a car while she was walking to the park. She incurred $750 in medical costs at a hospital emergency room. Kelly has coverage for this charge under which of her Personal Auto Policy (PAP) coverages?

Accepted Answer

A)  bodily injury liability 
B)  other-than collision 
C)  medical payments 
D)  collision 
A)  bodily injury liability 
B)  other-than collision 
C)  medical payments 
D)  collision

Question 7

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 8

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 9

Which of the following situations would be covered by the liability section of an unendorsed PAP if the insured is legally liable?

Accepted Answer

A)  The insured injures a pedestrian while operating a friend's new motorcycle. 
B)  The insured backs into and damages the garage door of his rented house. 
C)  The insured intentionally runs into another motorist's car after the driver cut in front of him. 
D)  The insured damages a parked car while driving a dump truck for his employer. 
A)  The insured injures a pedestrian while operating a friend's new motorcycle. 
B)  The insured backs into and damages the garage door of his rented house. 
C)  The insured intentionally runs into another motorist's car after the driver cut in front of him. 
D)  The insured damages a parked car while driving a dump truck for his employer.

Question 10

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 11

Larry has $25,000 of bodily injury liability coverage under his PAP. This limit is the minimum amount required by his state to be considered financially responsible. While on a vacation, Larry visited a neighboring state which has a minimum financial responsibility limit of $50,000 for bodily injury. Which of the following statements describes the situation for Larry while he was in the neighboring state?

Accepted Answer

A)  Larry's policy was suspended while he was in the neighboring state. 
B)  Larry had only $25,000 of liability coverage. 
C)  Larry's policy automatically provided $50,000 of liability coverage. 
D)  Larry's policy automatically provided $100,000 of liability coverage. 
A)  Larry's policy was suspended while he was in the neighboring state. 
B)  Larry had only $25,000 of liability coverage. 
C)  Larry's policy automatically provided $50,000 of liability coverage. 
D)  Larry's policy automatically provided $100,000 of liability coverage.

Question 12

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 13

Ken purchased a PAP with liability limits of 100/300/50, medical payments coverage, and collision coverage. Ken fell asleep while driving late at night. He crossed the center line and hit a car approaching from the other direction. The following losses occurred.
-The driver of the other car suffered $30,000 in bodily injuries.
-Ken's car sustained $5,000 in damages.
-Ken incurred $5,000 in medical expenses.
-The car that Ken hit was a total loss.
Which of Ken's Personal Auto Policy (PAP) coverages will cover the damage to Ken's car?

Accepted Answer

A)  bodily injury liability 
B)  collision coverage 
C)  medical payments coverage 
D)  property damage liability 
A)  bodily injury liability 
B)  collision coverage 
C)  medical payments coverage 
D)  property damage liability

Question 14

Rob purchased a Personal Auto Policy (PAP) with collision and other-than-collision coverage. Which of the following losses would be covered under his policy?

Accepted Answer

A)  Rob wrecked his car while using it as a taxi cab. 
B)  Thieves took Rob's radar detector from his car. 
C)  A flash flood washed Rob's car off the road and damaged it. 
D)  The new tires Rob had on the car were defective and wore out after 2 months. 
A)  Rob wrecked his car while using it as a taxi cab. 
B)  Thieves took Rob's radar detector from his car. 
C)  A flash flood washed Rob's car off the road and damaged it. 
D)  The new tires Rob had on the car were defective and wore out after 2 months.

Question 15

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

Question 16

Ken purchased a PAP with liability limits of 100/300/50, medical payments coverage, and collision coverage. Ken fell asleep while driving late at night. He crossed the center line and hit a car approaching from the other direction. The following losses occurred.
-The driver of the other car suffered $30,000 in bodily injuries.
-Ken's car sustained $5,000 in damages.
-Ken incurred $5,000 in medical expenses.
-The car that Ken hit was a total loss.
Which of Ken's Personal Auto Policy (PAP) coverages will cover the damage to the car that Ken hit?

Accepted Answer

A)  bodily injury liability 
B)  collision coverage 
C)  medical payments coverage 
D)  property damage liability 
A)  bodily injury liability 
B)  collision coverage 
C)  medical payments coverage 
D)  property damage liability

Question 17

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 18

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 19

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.It can be added to PAP to insurance motorcycles and motor scooters.

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

All of the following are insured persons under the liability coverage of the PAP EXCEPT

Accepted Answer

A)  a friend to whom the named insured loans a covered auto. 
B)  the employer of the named insured for actions resulting from the named insured's use of a covered auto. 
C)  the former spouse of the named insured who moved out of the home 2 years ago when the divorce was finalized. 
D)  a relative of the named insured if a member of the same household. 
A)  a friend to whom the named insured loans a covered auto. 
B)  the employer of the named insured for actions resulting from the named insured's use of a covered auto. 
C)  the former spouse of the named insured who moved out of the home 2 years ago when the divorce was finalized. 
D)  a relative of the named insured if a member of the same household.

Exam 20: Auto Insurance

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

Which of the following statements is true about uninsured motorists coverage under the Personal Auto Policy?

A car damaged in an auto accident may have reduced market or resale value after it is repaired. Some insureds have sought to recover this reduction in market or resale value. This loss in value is called

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?

The purpose of gap insurance is to

Kelly was hit by a car while she was walking to the park. She incurred $750 in medical costs at a hospital emergency room. Kelly has coverage for this charge under which of her Personal Auto Policy (PAP) coverages?

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

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 situations would be covered by the liability section of an unendorsed PAP if the insured is legally liable?

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

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

Rob purchased a Personal Auto Policy (PAP) with collision and other-than-collision coverage. Which of the following losses would be covered under his policy?

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.

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

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.It can be added to PAP to insurance motorcycles and motor scooters.

All of the following are insured persons under the liability coverage of the PAP EXCEPT

Risk and Its Treatment

Insurance and Risk

Introduction to Risk Management

Enterprise Risk Management and Related Topics

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 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)

Homeowners Insurance, Section I

Homeowners Insurance, Section II

Other Property and Liability Insurance Coverages

Commercial Property Insurance

Commercial Liability Insurance

Crime Insurance and Surety Bonds

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