Deck 12: The Personal Auto Policy

Question 1

The "defense" provision of the automobile insurance contract says the insurer:

A) will pay all defense costs, but those costs will reduce the limits of the policy
B) will indemnify the insured for expenses incurred as a result of hiring the insured's choice of defense attorney
C) does not need the consent of the insured to settle any claim against the insured
D) must investigate each and every claim

Answer 1

C

Question 2

Which of the following is true regarding your PAP contract?

A) Your personal property is covered while in your automobile.
B) Your Medical Payments will pay for your friend's injuries suffered while s/he is occupying your car.
C) If you drive a car that you do not own, you will have no coverage for anything.
D) All rental cars must be declared to be insured in order to have coverage on them.

Answer 2

B

Question 3

Jackson has purchased Liability coverage limits of 100/200/50 on his PAP. He has an accident and finds himself liable for damages awarded in the following order: Bodily injury to A - $250,000
Bodily injury to B - $200,000
Bodily injury to C - $150,000
Property Damage to D - $40,000
Which of the following is true?

A) Jackson's insurer will pay nothing to A.
B) Jackson's insurer will pay $250,000 to A.
C) Jackson's insurer will pay $100,000 to A, $150,000 to C, and $40,000 to D.
D) Jackson's insurer will pay nothing to C.

Answer 3

D

Question 4

Which of the following would not be paid for by the PAP's Other than Collision coverage?

A) The insured hits a deer and damages his car.
B) The car is sprayed with paint as it passes by a road construction site.
C) The driver of the car hits a bird and breaks the windshield.
D) A crate falls off the back of a truck and lands on the hood of the insured's car.

Question 5

The PAP coverage that pays the largest claims, and is possibly the most important coverage is:

A) other than collision
B) medical payments
C) liability
D) collision

Question 6

All of the following persons are covered under Larry's PAP except:

A) Larry's wife, who borrows a neighbor's car
B) Larry's son, who borrows a friend's car to get to work
C) Larry, while driving a car he borrowed from his employer to run an errand
D) Larry, while driving a borrowed commercial wrecker truck to tow his car to a repair garage

Question 7

All of the following would be paid under the PAP's Other than Collision coverage except:

A) the car is sprayed with paint as it passes under a bridge being painted
B) the driver of the car backs off a curb and damages the car's oil pan
C) the windshield is broken by a "flying" rock
D) while the insured is adjusting the carburetor, gasoline spills over the engine and causes a fire

Question 8

Barney challenges Fred to a drag race across the mall parking lot. During the race, Barney loses control of the car and collides with another vehicle, causing serious injuries to the other driver. Which of the following is a true statement regarding the PAP's treatment of this claim?

A) The PAP will not cover this because it occurred on private property.
B) The PAP will not cover this because it occurred while he was racing.
C) The PAP will cover this because it did not occur inside a racing facility.
D) The PAP will cover this because it does not in any way exclude coverage for racing.

Question 9

You are in an automobile accident with an uninsured motorist, and the accident is your fault. Your Uninsured Motorist limits are 10/20 and your medical bills are $22,000.You collect from your UM coverage:

A) $0
B) $10,000
C) $20,000
D) $22,000

Question 10

A tornado causes the garage to collapse on Mr. Woody's car, and the damage to the car is $5,000. Mr. Woody has a PAP with both Collision and Other than Collision coverages. A $200 deductible applies to the Collision coverage. There is a $0 deductible on Other than Collision coverage. How much is paid by the PAP for the tornado damage?

A) $0
B) $4,000
C) $4,800
D) $5,000

Question 11

Gerry has a PAP with Liability coverage limits of 25/50/10 and a $1,000 Medical Payments coverage limit. He collides with another car (he is at fault) and the following losses are incurred: Bodily injury to the driver of the other car = $100,000.
Bodily injury to the passenger of the other car = $3,000.
Property damage to the other car = $11,000.
Bodily injury to Gerry's wife = $5,000.
How much will the PAP pay, in total, for this accident?

A) $119,000
B) $60,000
C) $43,000
D) $39,000

Question 12

If your car is damaged in a collision that is your fault, the PAP says:

A) it is up to the insurer to have it fixed
B) you must protect it from further damage
C) all you have to do is notify the insurer and the insurer does the rest
D) the insurer's obligation is always to replace the car

Question 13

Ron's PAP has a $500 deductible for Collision and a $0 deductible for Other than Collision. Ron collides with a wild deer, causing $6,000 of damage to his car. He can recover from the insurer:

A) $6,000
B) $5,500
C) $6,500
D) $0

Question 14

Which of the following coverages is provided by the PAP?

A) Rental car reimbursement coverage for any car rental, regardless of why the car is needed
B) Liability insurance
C) Medical expense for disease
D) Personal property coverage

Question 15

Which of the following is false?

A) A pedestrian who has a PAP and is injured by an automobile can collect under his own Medical Payments coverage.
B) The PAP covers theft of the automobile.
C) The subrogation provision of the PAP does not apply to Medical Payments coverage.
D) There is no coverage for the insured while driving a rented automobile.

Question 16

Compulsory Liability Insurance laws are designed to:

A) reduce automobile insurance rates
B) decrease the number of people who carry automobile insurance
C) reduce the number of automobile accidents
D) force individuals to purchase auto liability insurance

Question 17

Under which of the following circumstances would Sue's PAP pay something for the loss?

A) Sue borrows her neighbor's car with permission. She causes an accident and is sued for an amount LESS THAN her neighbor's limit of liability.
B) Sue borrows her neighbor's car with permission. She causes an accident and is sued for an amount MORE THAN her neighbor's limit of liability.
C) Sue regularly uses her car in a business to drive college students to the airport for $50 one-way. She causes an accident and is sued by one of her paying passengers.
D) Sue is sued for causing a collision while operating a motorcycle.

Question 18

Which one of the following is false concerning the PAP?

A) A pedestrian struck by an automobile can collect under his Medical Payments coverage
B) Defense, settlement, and supplementary payments are in excess of the stated limits of liability in the PAP
C) Other than Collision coverage will pay for theft of the automobile
D) Medical Payments coverage will not pay for the insured's injuries if the accident is the insured's fault

Question 19

A PAP is issued with both Collision and Other than Collision coverages. Two valuable cameras are stolen from the car. The cameras would be paid for by:

A) Other than Collision coverage
B) Collision coverage
C) a homeowner's policy, if one is in force
D) the PAP, but ONLY if there are visible signs of forcible entry on the auto

Question 20

If Paul causes a car accident, and the car he hits is driven by an insured motorist, Paul's PAP will pay for the other driver's damages:

A) under coverage A, Liability
B) under coverage C, Uninsured Motorist
C) under both coverages A and C
D) nothing since an uninsured motorist was injured

Question 21

Bob loans his car to Norm, and Norm wrecks the car. Both Bob and Norm have PAP's on their owned vehicles, and both men have purchased all four major coverages (A, B, C and

A) Bob's
B) Norm's
C) They'll both be primary and will share the loss equally.
D) Neither policy will pay on a primary basis because the loss is not covered.
D) on their automobiles. Whose policy will pay for this loss on a PRIMARY basis?

Question 22

Celeste has Liability coverage limits on her PAP of 100/200/50. She has an accident and finds herself liable for damages awarded in the following order: Bodily injury to A - $250,000
Bodily injury to B - $30,000
Bodily injury to C - $150,000
Property Damage to D - $48,000
Which of the following is true?

A) Her insurer will pay $150,000 to C.
B) Her insurer will pay $250,000 to A.
C) Her insurer will pay $30,000 to B.
D) Both A and C are true.

Question 23

Under the PAP Liability Coverage, the "insured" is:

A) the person who causes the accident and/or damages
B) the person or persons who is/are injured in the accident
C) both the at-fault driver and those persons injured
D) the police officer who arrives at the scene and beats up the at-fault driver

Question 24

Antonius accidentally runs over his friend Shaq while Shaq is walking across the street. The police declare the accident to be Antonius' fault. Where could Shaq have his injuries covered?

A) Antonius' PAP Medical Payments Coverage
B) Antonius' PAP Liability Coverage
C) Shaq's PAP Medical Payments Coverage
D) Both B and C

Question 25

Uninsured Motorist coverage:

A) provides first-dollar coverage for damage to the insured's own autos
B) protects the insured against financially irresponsible drivers who have no auto liability insurance
C) doubles the premium for liability coverage
D) is available only to drivers with excellent driving records

Question 26

When you have an auto accident that is your fault, your PAP's Liability coverage will pay for all of the following except:

A) bodily injuries of passengers in other cars that you hit in the accident
B) bodily injuries of non-family members who are passengers in your car at the time of the accident
C) bodily injuries of your spouse who is a passenger in your car at the time of the accident
D) None of the above; in other words, ALL of the above are items your PAP's Liability coverage would pay for.

Question 27

Dameion has a collision that is his fault. The ACV of his vehicle is $13,922. To repair the damages caused in the accident, it will cost $15,722. What will the insurer likely pay Dameion under his Collision coverage, assuming his deductible is $500?

A) $0
B) $13,422
C) $13,922
D) $15,722
E) $15,222

Question 28

Annette lives in Texas, and has a PAP with the minimum limits of liability required by law in this state, which are 20/40/15. She drives to Alaska, where the minimum limits of liability are 50/100/25. While in Alaska, she cause an accident. What is the most that her PAP will pay for the damages she caused others to suffer?

A) 20/40/15
B) 15/30/10
C) 50/100/25
D) 70/140/40

Question 29

You drink 19 beers to celebrate the end of your risk management and insurance class, and then have an accident while driving home from the bar. The police charge you with drunk driving, and with hitting another automobile from behind. What will your automobile insurer do when you file a claim for the damage to your car, and what will it do when the injured people in the other car file claims to have their bodily injuries paid for?

A) Nothing. The insurer does not have to pay any of these claims.
B) The insurer will pay all the claims.
C) The insurer will pay the liability claims, but not the damages to your car, because of the fact that you were drunk.
D) The insurer will say, "Who are you? Nobody here remembers selling you a policy."

Question 30

Which of the following is true?

A) Suing an uninsured motorist for damages they cause you to suffer is not a promising source of recovery.
B) If you are struck by an uninsured motorist and want your PAP's Uninsured Motorist coverage to pay for your bodily injuries, you must convince your insurer that the Uninsured Motorist was at-fault in the incident.
C) If you cannot clearly establish that an uninsured motorist was at fault in the accident, you may have to enter the arbitration process to get your insurer to pay for your damages under the PAP's Uninsured Motorist coverage.
D) All of the above

Question 31

Mindy is a member of the Zeta Omega Sorority. While driving to a local food bank to deliver donations from the sorority members, she causes an accident. She collides with a large carrot truck. The truck driver subsequently sues Mindy and her sorority for her negligent driving. Which of the following is a true statement?

A) Mindy's PAP Liability coverage will cover her, but not the sorority.
B) Mindy's PAP Liability coverage will cover the driver of the carrot truck, but not her.
C) Mindy's PAP Liability coverage will cover both Mindy and the sorority.
D) None of the above

Question 32

Latisha runs over a deer with her car. The ACV of her vehicle is $7,250. To repair the damages will cost $4,375. What will the insurer likely pay Latisha for this claim, assuming that her Collision deductible is $500, and her Other than Collision deductible is $200?

A) $3,875
B) $4,175
C) $6,750
D) none of the above

Question 33

Which of the following claims would not be covered by the Medical Payments coverage in the PAP?

A) The insured is injured because of an accident while driving his motorcycle.
B) The insured is struck by a house trailer which had become unhitched from the towing vehicle.
C) The insured is intentionally run over by his wife or girlfriend.
D) The insured is struck as a pedestrian when the driver of a car loses control.

Question 34

The PAP's Other than Collision Coverage would pay for: I. Running off the road and into a lake
II) Hitting a deer
III) Hitting a chicken, losing control of your car as a result, and crashing into a ditch
IV) Having a non-war-related missile land on top of your car
V) Having your car stolen
VI) Having your car vandalized by someone you broke up with

A) II, III, IV, V, and VI only
B) II, III, V, and VI only
C) II, IV, V, and VI only
D) All of the above (I, II, III, IV, V, and VI)

Question 35

Tammy has a PAP with Medical Payments coverage of $5,000, and Uninsured Motorist coverage of $100,000/$200,000. She is hit by an uninsured motorist and suffers bodily injuries in the amount of $225,000. In total, her PAP will pay her:

A) $100,000
B) $105,000
C) $205,000
D) $225,000

Question 36

Nurse Goodbody works for Dr. Bond. While driving to the hospital one day, Dr. Bond has an accident that is his fault. Nurse Goodbody, as a passenger of the car, is injured. Which of the following is true?

A) Dr. Bond's PAP Liability Coverage will pay for her injuries.
B) Because she was a passenger, the PAP automatically defines her "an insured," so she cannot collect from Dr. Bond's PAP Liability Coverage.
C) She can collect from Dr. Bond's PAP's Liability coverage if she is not covered by workers' compensation.
D) None of the above

Question 37

Chuck has an accident in which he is at fault. His liability limits on his PAP are 100/200/50. Five people besides Chuck are injured in the auto accident. Assuming that the following claims are paid in the order in which they are listed, how much will Chuck's insurer pay, in total, for all the bodily injuries? Joe = $75,000 Mama = $125,000 Fred = $2,500 Granny = $2,500 Bo = $5,000

A) $75,000
B) $200,000
C) $185,000
D) $100,000

Question 38

Which of the following is not a valid reason to carry Medical Payments coverage?

A) Guests injured in an automobile accident might hesitate to sue their hosts.
B) A negligent host would probably feel a moral obligation to pay for medical bills for injured guests.
C) To facilitate settlement for relatively small amounts of medical expense
D) To provide reasonably priced health insurance for the insured and his family

Question 39

In the Personal Automobile Policy, "your covered auto" includes all of the following except:

A) any car listed on the declarations page
B) a newly acquired auto
C) your trailer, if being towed by a passenger car, pickup, panel truck, or van
D) a motorcycle, just as long as it is not borrowed

Question 40

Underinsured Motorist coverage:

A) is the same as Uninsured Motorist coverage
B) potentially pays the difference between the negligent driver's liability coverage amount and the injured party's UM limits
C) pays for property damage you cause when your victims have no coverage
D) pays for an insured's negligence when insufficient liability limits exist

Question 41

Mandy's car is stolen and she files a claim with her PAP insurer. Which of the following items will not be paid for by her Other than Collision coverage?

A) the actual cash value of the car
B) the car's factory-installed GPS navigational system, worth $999
C) her cell phone that had a built-in GPS navigational system
D) None of the above; all these items would be covered by her policy.

Question 42

The PAP only covers losses that occur while the automobile is within the United States, Canada, or Mexico, or being transported between ports thereof.

Question 43

Robert drove his car from California to New Mexico. He had an accident right after crossing the border into New Mexico. His PAP provided coverage for this incident.

Question 44

A PAP may be canceled at any time for any reason if the insurance company no longer wants to insure you.

Question 45

Underinsured Motorist coverage:

A) is the same as Uninsured Motorist coverage
B) is automatically included in the PAP's Part C coverage
C) pays for property damage you cause when victims have no coverage
D) none of the above

Question 46

Property Damage Liability of the Personal Automobile Policy provides coverage to reimburse you if your automobile is damaged.

Question 47

PAP coverage A, which includes Property Damage Liability, provides coverage to reimburse you if your automobile is damaged.

Question 48

The PAP's coverage territory is the USA, Puerto Rico, U.S. Territories and Possessions, and countries bordering the USA.

Question 49

When you borrow someone's car and wreck it, you have the option of letting your automobile insurance pay on a primary basis for the accident.

Question 50

If you rent a car while on vacation, you have coverage for any collision damage to the rental car under your own PAP, assuming you have purchased such coverage on your owned automobiles.

Question 51

You collide with another vehicle and the accident is your fault. You may collect for damages to your vehicle, less the deductible, from your insurance company under Coverage D, Collision, if a premium for Collision has been paid.

Question 52

Your PAP's Medical Payments coverage will pay for your bodily injuries if you get hit by a car as a pedestrian.

Question 53

Meghan has a PAP on 3 cars, and, she owns a fourth car on which no coverage has been purchased. Which of the following persons are covered by Meghan's PAP assuming they are driving the uninsured car?

A) Meghan, plus any other family member residing in the household
B) Any family member that resides in the household, but NOT Meghan
C) Only Meghan
D) None of the above would be covered.

Question 54

Your vehicle is damaged by another vehicle and the accident is the fault of the other driver. You may collect for damages to your vehicle, less the deductible, from your insurance company under Coverage D, Collision, if a premium for Collision has been paid.

Question 55

All of the following would be paid under the PAP's Other than Collision coverage except:

A) the car skids out of control due to ice on the road, and hits a tree
B) the driver of the car hits a bunny rabbit, loses control of the car, and runs into a ditch
C) the windshield gets broken, and there is no known outside cause for the damage
D) the car is damaged by a fire the insured negligently started while shooting off fireworks on the 4th of July

Question 56

Claims paid under the PAP's "Collision Coverage" are usually considered to be the insured's fault.

Question 57

To have your bodily injuries covered under your Uninsured Motorist Coverage, you must have been at fault in the auto accident that caused your bodily injuries.

Question 58

When you have an auto accident that is your fault, your PAP's Liability coverage will pay for all of the following except:

A) bodily injuries of your family members riding with you
B) bodily injuries of non-family members who are passengers in your car at the time of the accident
C) bodily injuries of your best friend who is a passenger in your car at the time of the accident
D) the cost to repair or replace property belonging to others that you damaged in the accident

Question 59

Uninsured Motorist coverage usually provides property damage coverage to the insured for damages to his auto caused by an insured motorist.

Question 60

Financial responsibility laws legally require every driver to purchase automobile insurance.

Question 61

What is the difference between Collision and Other than Collision coverages? Why does the PAP list certain perils in Other than Collision when they can be caused by collision? What happens if the cause of loss is not listed?

Question 62

Does the PAP provide any loss of use (indirect coverage) in the contract? What is it and how does it work (if any)?

Question 63

If an insured is using his/her own private passenger car under normal circumstances, in what situations can the insured lose legal liability coverage?

Question 64

What is the difference between a single limit and a split limit in expressing liability limits in the PAP?

Question 65

Explain the purpose of Uninsured Motorist coverage.