Chapter 16: Commercial Auto Insurance

1. Which of the following Commercial Auto coverage forms does not offer liability coverage?

Business Auto

Business Auto Physical Damage

Garage

Trucker's

B is correct. Business Auto Physical Damage covers losses to the insured's own vehicles, not losses to other's vehicles the insured might become liable for.

Explanation

B is correct. Business Auto Physical Damage covers losses to the insured's own vehicles, not losses to other's vehicles the insured might become liable for.

2. Which of the following businesses might be covered under a Garage coverage form?

Used car dealer

Catering company

Auto body shop

Service station

A, C, and D are correct. The Garage coverage form is designed to cover automobile-type businesses, such as car dealerships, gas stations, and parking garages. These types of businesses cannot be covered under the Business Auto coverage form.

Explanation

A, C, and D are correct. The Garage coverage form is designed to cover automobile-type businesses, such as car dealerships, gas stations, and parking garages. These types of businesses cannot be covered under the Business Auto coverage form.

Submit

3. Which of the following losses would be paid under the Business Auto coverage form's Comprehensive coverage?

Gradual corrosion of the grillwork on a covered auto because of continuous exposure to salt air

Overturn of a covered auto

Collision damage to a covered auto

Theft of a covered auto

D is correct. Losses from wear and tear are excluded. The other two losses are considered collision losses.

Explanation

D is correct. Losses from wear and tear are excluded. The other two losses are considered collision losses.

4. Which portion of the Garage coverage form covers liability for damage to property of others in the insured's care, custody, or control?

Liability

Garagekeepers

Physical Damage

Both A and B

B is correct. The Liability section of the Garage coverage form excludes liability for damage to customers' autos in the insured's custody. Coverage for this exposure is provided under the Garagekeepers section of the Garage form.

Explanation

B is correct. The Liability section of the Garage coverage form excludes liability for damage to customers' autos in the insured's custody. Coverage for this exposure is provided under the Garagekeepers section of the Garage form.

5. The Garage coverage form covers liability arising out of which of the following?

Ownership, maintenance, or use of covered autos

Garage operations

A trailer interchange agreement

Advertising injury

A and B are correct. Trailer Interchange coverage and advertising injury are not included in the Garage coverage form.

Explanation

A and B are correct. Trailer Interchange coverage and advertising injury are not included in the Garage coverage form.

Submit

6. Who of the following would be considered an insured under Business Auto Liability coverage?

The named insured

Others while using a covered auto with permission

The owner of a borrowed auto

Others who become liable for the conduct of an insured

A, B, and D are correct. The owner of a hired or borrowed auto is not an insured for Liability coverage while using the covered auto.

Explanation

A, B, and D are correct. The owner of a hired or borrowed auto is not an insured for Liability coverage while using the covered auto.

Submit

7. Which of the following can be considered covered autos only under the Garage coverage form?

Customers' autos left with the insured for service

Autos the insured has leased to use in the business

Autos held for sale by a dealer

Autos owned by the insured and used in the insured's business

A and C are correct. There are two covered auto symbols that are unique to the Garage coverage form. Symbol 30 is used for customers' autos left with the insured for service, repair, storage, or safekeeping. Symbol 31 is used for Physical Damage coverage only for the dealers' autos and autos held for sale by dealers, nondealers, or trailer dealers.

Explanation

A and C are correct. There are two covered auto symbols that are unique to the Garage coverage form. Symbol 30 is used for customers' autos left with the insured for service, repair, storage, or safekeeping. Symbol 31 is used for Physical Damage coverage only for the dealers' autos and autos held for sale by dealers, nondealers, or trailer dealers.

Submit

8. Which of the following perils are included in the Business Auto coverage form's Specified Causes of Loss coverage?

Collision

Earthquake

Flood

Theft

B, C, and D are correct. Specified Causes of Loss coverage is a limited type of Comprehensive coverage. It covers fire, lightning, explosion, theft, windstorm, hail, earthquake, flood, vandalism, or mischief, as well as sinking, burning, collision, or derailment of a conveyance transporting the covered auto.

Explanation

B, C, and D are correct. Specified Causes of Loss coverage is a limited type of Comprehensive coverage. It covers fire, lightning, explosion, theft, windstorm, hail, earthquake, flood, vandalism, or mischief, as well as sinking, burning, collision, or derailment of a conveyance transporting the covered auto.

Submit

9. Which of the following would be included in an unendorsed Business Auto coverage policy? Select all that apply.

Liability coverage

Physical Damage coverage

Uninsured Motorists coverage

Medical Payments coverage

A and B are correct. Uninsured Motorists and Medical Payments coverage are available only by endorsement.

Explanation

A and B are correct. Uninsured Motorists and Medical Payments coverage are available only by endorsement.

Submit

10. Which of the following statements concerning Business Auto Liability coverage are correct?

It covers BI or PD caused by an accident.

It does not cover pollution losses.

It only covers sums for which the insured is legally liable.

The BI or PD must result from the ownership, maintenance, or use of a covered auto.

A, C, and D are correct. This coverage pays all sums an insured legally must pay as a covered pollution cost or expense to which the policy applies as long as certain conditions are met.

Explanation

A, C, and D are correct. This coverage pays all sums an insured legally must pay as a covered pollution cost or expense to which the policy applies as long as certain conditions are met.

Submit

11. Which of the following coverages are included in an unendorsed Garage coverage form?

Garagekeepers

Uninsured Motorists

Liability

Physical Damage

A, C, and D are correct. The Garage coverage form includes Liability, Garagekeepers, and Physical Damage coverage. Medical Payments, Uninsured Motorist, and Underinsured Motorists coverage may be added by endorsement.

Explanation

A, C, and D are correct. The Garage coverage form includes Liability, Garagekeepers, and Physical Damage coverage. Medical Payments, Uninsured Motorist, and Underinsured Motorists coverage may be added by endorsement.

Submit

12. Which of the following coverages are provided by Business Auto Physical Damage coverage?

Collision

Transportation Expenses

Comprehensive

Garagekeepers Insurance

A, B, and C are correct. The Physical Damage portion of the Business Auto coverage form contains three principal coverages: Comprehensive, Specified Causes of Loss (a more limited type of Comprehensive coverage), and Collision. Transportation expenses are covered as part of Physical Damage coverage. Garagekeepers insurance is not included in the Business Auto coverage form.

Explanation

A, B, and C are correct. The Physical Damage portion of the Business Auto coverage form contains three principal coverages: Comprehensive, Specified Causes of Loss (a more limited type of Comprehensive coverage), and Collision. Transportation expenses are covered as part of Physical Damage coverage. Garagekeepers insurance is not included in the Business Auto coverage form.

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13. Which of the following are excluded under Business Auto Liability coverage?

Liability assumed under a contract that is considered an insured contract

Damage to the insured's own auto

Injury to employees covered by workers compensation laws

Liability for property in the insured's custody

B, C, and D are correct. The exclusion for liability assumed under contract or agreement does not apply to contracts that meet the policy's definition of an insured contract.

Explanation

B, C, and D are correct. The exclusion for liability assumed under contract or agreement does not apply to contracts that meet the policy's definition of an insured contract.

Submit