Question 1

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 B

Question 2

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

Question 3

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 D

Question 4

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)  A friend's suitcase and laptop computer were damaged in an auto accident while the insured and the friend were vacationing together.
D)  The insured damages a parked car while driving a dump truck for his or her employer.

Question 5

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.

Question 6

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

Question 7

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

Question 8

Dennis was involved in an accident.He believes the damage to his auto is $6,000.His insurer believes the damage is only $3,500.Which PAP provision is designed to handle disputes between the insurer and the insured over the amount of the loss?

Accepted Answer

A)  other insurance provision
B)  agreed amount endorsement
C)  coinsurance provision
D)  appraisal provision

Question 9

All of the following are exclusions under the medical payments coverage of the PAP EXCEPT

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.

Question 10

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.

Question 11

Which of the following situations would be covered under the liability section of the PAP?
I.A mechanic is sued by a pedestrian who is injured when the mechanic has an accident while road testing the insured's auto.
II.The daughter of the named insured is sued after she has an accident when a new friend she just met at a campus hangout lets her drive his car.

Accepted Answer

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

Question 12

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.

Question 13

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 6 months 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 14

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.

Question 15

Rob purchased a Personal Auto Policy (PAP)with collision and other-than-collision coverage.All of the following losses are excluded under this physical damage coverage EXCEPT

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.

Question 16

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

Question 17

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.

Question 18

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.

Question 19

All of the following statements about Part D (coverage for damage to your auto)of the PAP are true EXCEPT

Accepted Answer

A)  Coverage may be purchased with or without collision insurance.
B)  Losses are paid regardless of fault.
C)  Coverage applies to a nonowned auto occasionally driven by an insured.
D)  No coverage is provided for newly-acquired vehicles.

Question 20

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.

Exam 22: Auto Insurance

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.

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

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:

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.

Dennis was involved in an accident.He believes the damage to his auto is $6,000.His insurer believes the damage is only $3,500.Which PAP provision is designed to handle disputes between the insurer and the insured over the amount of the loss?

All of the following are exclusions under the medical payments coverage of the PAP 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

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

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

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

Rob purchased a Personal Auto Policy (PAP) with collision and other-than-collision coverage.All of the following losses are excluded under this physical damage coverage EXCEPT

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

All of the following statements about Part D (coverage for damage to your auto) of the PAP are true EXCEPT

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