Question 1

Opponents of no-fault assert that many people who favor no-fault do so primarily because they expect it will be cheaper than the present system.

Accepted Answer

No-fault insurance systems are often supported because they are expected to reduce legal and administrative costs associated with claims, making it cheaper than traditional tort-based systems.

Question 2

Like in homeowner's policy, intentionally caused (nonfortuitous) harm is always excluded in automobile insurance.

Accepted Answer

Intentionally caused harm or damage is typically excluded in both homeowner's and automobile insurance policies because insurance is designed to cover accidental losses, not deliberate actions.

Question 3

When a negligent driver meets the legal insurance requirements but is legally responsible for additional amounts, the driver is not an uninsured motorist.

Accepted Answer

An uninsured motorist is someone who does not have any insurance coverage. If a driver meets legal insurance requirements but is responsible for amounts beyond their coverage, they are considered underinsured, not uninsured.

Question 4

Financial responsibility laws do not have any effect on the percentage of drivers with auto liability insurance.

Accepted Answer

Financial responsibility laws require drivers to prove they can pay for damages or injuries caused in an auto accident, which typically leads to a higher percentage of drivers purchasing auto liability insurance to comply with these laws.

Question 5

The JUA differs from an auto insurance plan in that only designated servicing carriers can issue coverage to participants.

Accepted Answer

The Joint Underwriting Association (JUA) is a mechanism used in the insurance industry to offer coverage to those unable to obtain it in the standard market. Unlike an auto insurance plan where any insurer can provide coverage, in a JUA, only designated servicing carriers are authorized to issue policies to participants, making this a key difference between the two.

Question 6

Every type of nonexcluded loss-causing event other than collision is considered comprehensive.

Accepted Answer

Comprehensive coverage in auto insurance is designed to cover damages to your vehicle not caused by a collision, including theft, vandalism, natural disasters, falling objects, and animal damage.

Question 7

Under the no-fault concept, first-party benefits such as PIP are provided with regard to fault as a way to encourage legal battles.

Accepted Answer

Under the no-fault concept, first-party benefits such as Personal Injury Protection (PIP) are provided without regard to fault, primarily to reduce the number of lawsuits and legal battles over fault in minor accidents.

Question 8

Under modified no-fault laws, only no-fault benefits are available for nonserious injuries resulting in losses below the threshold.

Accepted Answer

Under modified no-fault laws, individuals are limited to claiming no-fault benefits for nonserious injuries that do not meet a certain threshold, allowing them to sue for damages only if their injuries are serious or if their losses exceed the threshold.

Question 9

In add-on plans, rights to litigate are not affected.

Accepted Answer

Add-on plans, which are additional coverage options in insurance policies, do not affect the insured's rights to litigate; they simply provide extra coverage or benefits.

Question 10

Coverage applies for accidents arising out of ownership, maintenance, or use of a motor vehicle you own or have available for regular use even if it is not a declared auto in the declarations section of the policy.

Accepted Answer

Coverage typically applies only to vehicles listed in the declarations section of the policy, unless the policy specifically includes coverage for other vehicles.

Question 11

In the event of a loss while you are driving a friend's car, your friend's insurance is primary coverage, or the first payee in a situation where two or more coverages apply, and your insurance is excess coverage.

Accepted Answer

In most cases, when you are driving a friend's car with their permission, their auto insurance would be considered the primary coverage in the event of an accident or loss. Your own auto insurance would typically serve as secondary or excess coverage, kicking in only if the limits of your friend's policy are exceeded.

Question 12

A passenger in your car who is injured can recover under both liability and medical payments coverages for the same losses.

Accepted Answer

The answer of A passenger in your car who is...

Question 13

In add-on plans, auto plans do not limit rights to litigate and do not require that insurers offer first-party coverage similar to what is available in no-fault states.

Accepted Answer

Add-on plans allow policyholders to litigate without restrictions similar to traditional tort states, but they do not mandate insurers to offer first-party benefits like those in no-fault states.

Question 14

The limit of liability for medical payments is on a per person basis, such as $5,000 per person.This is the maximum limit of liability for each person injured in any one accident.If you have two autos insured, with a medical payments limit for each shown on the declarations page, you cannot stack the limits together.

Accepted Answer

Stacking of limits is generally not allowed for medical payments coverage, meaning you cannot combine the limits from multiple vehicles to increase the coverage for a single person in an accident.

Question 15

The substandard market is created by state law.

Accepted Answer

The substandard market, also known as the non-standard market, is not created by state law but rather exists to serve individuals who are unable to obtain insurance in the standard market due to various risk factors. It is a result of the insurance industry's need to categorize risks and is not a creation of legislation.

Question 16

The insurer does not have the right to settle claims without the insured's approval even if it finds this expedient.

Accepted Answer

Most insurance policies grant the insurer the right to settle claims in a manner they deem expedient, including without the insured's explicit approval, as part of their contractual rights to manage claims.

Question 17

Uninsured motorists coverage does not pay for bodily injuries caused by an accident with another vehicle whose driver is negligent and whose insurance company is insolvent.

Accepted Answer

Uninsured motorists coverage is specifically designed to pay for bodily injuries (and in some cases, property damage) caused by an accident with a driver who is either uninsured or whose insurance company is unable to pay due to insolvency.

Question 18

Family health insurance company is broader than medical payments coverage of PAP.

Accepted Answer

The answer of Family health insurance company is broader than...

Question 19

Maryland State Fund is a government-operated residual market company that provides coverage to drivers who cannot obtain insurance through the regular market.

Accepted Answer

Maryland State Fund, also known as the Maryland Automobile Insurance Fund (MAIF), is a state-run entity that offers insurance to high-risk drivers who are unable to secure coverage from private insurers.

Question 20

Auto insurance plans have provided significant profits to the auto insurance industry because of generally higher rates than those found in the voluntary market.

Accepted Answer

Auto insurance plans, often referred to as assigned risk plans, typically offer coverage at higher rates due to the increased risk associated with insuring drivers who cannot obtain insurance through the voluntary market. These plans are not designed for profit but to ensure that high-risk drivers are able to obtain legally required insurance.

Quiz 14: Multirisk Management Contracts: Auto