Chapter 9 - Personal Auto Insurance

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1. Vanessa's Liability coverage has split limits of 100/300/50. How much coverage does Vanessa have for property damage liability?

$5,000

$50,000

$100,000

$300,000

B is correct. The last figure is the Property Damage limit.

B is correct. The last figure is the Property Damage limit.

B is correct. The last figure is the Property Damage limit.

B is correct. The last figure is the Property Damage limit.

Explanation

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About This Quiz

Chapter 9 - Personal Auto Insurance - Quiz

Only used by FSS Team for preparing INS Exam.

2. Ann's auto was damaged when it was struck by another car whose driver ran a stop sign. Which part of Ann's Personal Auto policy will cover the damage to her car?

Collision Coverage of Part DCoverage for Damage to Your Auto

Other Than Collision Coverage of Part DCoverage for Damage to Your Auto

Part ALiability Coverage

Part CUninsured Motorists Coverage

A is correct. This would be considered a collision loss under Part D of the Personal Auto policy because it involves the impact of an auto covered by the policy with another vehicle. Part ALiability coverage would not cover damage to the insured's own car. Part CUninsured Motorists coverage applies only to bodily injury in most states.

Explanation

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3. If the named insured acquires a new car that does not replace a previously insured auto, what must the insured do to obtain liability coverage for the auto under her Personal Auto policy from the day it is acquired?

Nothing coverage is automatic

Submit a new policy application

Notify the company of the new car within 14 days of the purchase

Notify the company immediately; no coverage applies until the company is notified

C is correct. The Personal Auto policy considers newly acquired cars to be covered autos. How coverage applies depends on several factors, such as the policy coverage, whether the car is a replacement auto, and when the insurer is notified about the new car.

Explanation

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4. An Assigned Risk Plan covers which of the following?

Insureds who are uninsurable in the standard market

Insureds who do not own their own autos

Insurance companies for losses involving government-owned automobiles

Insureds who cannot afford standard rates

A is correct. Assigned Risk Plans insure motorists with poor driving records who are unacceptable risks for most insurance companies.

Explanation

A is correct. Assigned Risk Plans insure motorists with poor driving records who are unacceptable risks for most insurance companies.

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5. Which of the following individuals have Liability coverage under Mr. Stump's Personal Auto policy?

Edna, Mr. Stump's wife, who resides with him

Mr. Stump's 16-year-old son, who lives at home

A neighbor who borrows Stump's car with Stump's permission

A group of teenagers who steal Mr. Stump's car from a parking lot and take it for a joy ride

A, B, and C are correct. Under Part A, the named insured, his or her spouse, or any family member is insured for the ownership, maintenance, or use of any auto or trailer. A family member is any person related to the named insured who is a resident of the insured's household. An individual who uses a vehicle without permission is not covered under Part A, unless that person is a family member using a covered auto owned by the insured.

Explanation

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6. Which of the following would be eligible for a Personal Auto policy?

McGuffin's Linen Service Company

Nancy Hardwicke

John and Suzette Oglesby, a married couple who live together

Don Wilson's 16-wheel big rig, which he owns

B and C are correct. Choice A is not correct because the auto is owned by a business. Choice D is not correct because a PAP can only insure four-wheel vehicles.

Explanation

B and C are correct. Choice A is not correct because the auto is owned by a business. Choice D is not correct because a PAP can only insure four-wheel vehicles.

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7. Medical Payments coverage provides protection for all of the following except which one?

The insured

The insured's family

Passengers in the insured's vehicle

Occupants of a vehicle that is struck by the insured's vehicle

D is correct. Medical Payments coverage provides protection for the named insured, family members, and passengers in the named insured's auto for injuries received in an accident, regardless of who was at fault. It is not a form of Liability coverage for injuries sustained by passengers in another auto involved in an accident with the insured.

Explanation

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8. Which of the following losses would be paid under the Other Than Collision coverage of the Personal Auto policy?

A radiator develops a leak after the car has 100,000 miles on it.

The insured's car is stolen and never recovered.

The insured's auto skids on icy pavement and flips over.

The insured's auto is damaged when it is hit by another car that runs a red light.

B is correct. Choice A is not correct because mechanical breakdown is excluded by the policy. Choice C and Choice D are not correct because they are collision losses.

Explanation

B is correct. Choice A is not correct because mechanical breakdown is excluded by the policy. Choice C and Choice D are not correct because they are collision losses.

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9. Which of the following could be covered under the Liability section of a named insured's Personal Auto policy?

Injuries a named insured receives in a car accident

Injuries to a person struck by the named insured's auto

Injuries to a member of the named insured's family who was a passenger in the named insured's car when it... Injuries to a member of the named insured's family who was a passenger in the named insured's car when it overturned

Damage to personal property being transported when the car was involved in a collision

B is correct. Part ALiability coverage covers damages for bodily injury or property damage that an insured becomes legally responsible for because of an auto accident. Injuries to the named insured or his or her family members would be covered under Part BMedical Payments coverage. Loss of personal property of an insured is not a matter of legal liability, and is not covered.

Explanation

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10. Which of the following autos owned by the named insured could be covered under a Personal Auto policy?

Pickup truck used on the insured's farm

Station wagon

Chevrolet sedan

Panel truck used to make deliveries for the insured's small manufacturing operation

A, B, and C are correct. Choice D is not correct because the auto is used for business purposes.

Explanation

A, B, and C are correct. Choice D is not correct because the auto is used for business purposes.

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11. Mary's Liability coverage limits are 50/100/50. A driver who was injured in an accident caused by Mary obtains a $75,000 judgment against her. Postjudgment interest of $5,000 accrues between the time the judgment was entered by the court and the time the insurer pays. What is the total amount Mary's insurance company will pay for this loss?

$50,000

$55,000

$75,000

$80,000

B is correct. The policy will pay up to its liability limit of $50,000 plus the postjudgment interest of $5,000.

Explanation

B is correct. The policy will pay up to its liability limit of $50,000 plus the postjudgment interest of $5,000.

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12. Which of the following losses could be paid under Uninsured Motorists coverage? (Assume that there are no endorsements attached to the policy.)

Tabb, the insured, drives the wrong way down a one-way street and collides with another car. Tabb is seriously injured.... Tabb, the insured, drives the wrong way down a one-way street and collides with another car. Tabb is seriously injured. The driver of the other car has no Liability insurance.

Barb, the insured, is hit by a drunk driver who is uninsured. She is not injured, but her car is... Barb, the insured, is hit by a drunk driver who is uninsured. She is not injured, but her car is totaled.

Leslie, the insured, is injured when she is struck by a car that runs a red light. The driver has... Leslie, the insured, is injured when she is struck by a car that runs a red light. The driver has no Liability insurance.

Bernard, the insured, is on his way to work when his vehicle is rear-ended by a car that was following... Bernard, the insured, is on his way to work when his vehicle is rear-ended by a car that was following too closely. Bernard suffers a back injury. The driver of the other car carries the minimum amount of insurance required in the state.

C is correct. Choice A is not correct because the uninsured driver was not liable for the accident. Choice B is not correct because the loss does not involve bodily injury. Choice D is not correct because the driver who caused the accident is not an uninsured motorist.

Explanation

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13. Which of the following could be considered an uninsured motorist?

Motorist who has less insurance than required by the state's financial responsibility law

Driver whose insurance company is insolvent

Motorist who has enough insurance to meet the state's financial responsibility law, but not enough to fully reimburse the insured... Motorist who has enough insurance to meet the state's financial responsibility law, but not enough to fully reimburse the insured for his or her injuries

Unidentified hit-and-run driver

A, B, and D are correct. Choice C is an example of an underinsured motorist.

Explanation

A, B, and D are correct. Choice C is an example of an underinsured motorist.

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14. Which of the following losses would be excluded under Part D of a Personal Auto policy?

When the insured fails to pay his taxes, the IRS confiscates and sells his car.

The insured's car is stolen on a cold winter day. The thieves run down the battery, and then abandon the... The insured's car is stolen on a cold winter day. The thieves run down the battery, and then abandon the car in a field. Before the car is discovered, the battery freezes and is ruined.

The insured's cell phone that she sometimes carries in her car is damaged in a collision.

Custom carpeting that the named insured added to his van is damaged in a flood.

A, C, and D are correct. Damage due to freezing is normally excluded under Part D. However, an exception is made when the damage results from the total theft of the auto.

Explanation

A, C, and D are correct. Damage due to freezing is normally excluded under Part D. However, an exception is made when the damage results from the total theft of the auto.

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