Question 1

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 D) on their automobiles. Whose policy will pay for this loss on a PRIMARY basis?

Accepted Answer

Bob's policy will pay on a primary basis because insurance coverage follows the vehicle first. Since Bob is the owner of the car, his insurance is primary in the event of a loss.

Question 2

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?

Accepted Answer

Her insurance policy has liability coverage limits of 100/200/50, which means $100,000 per person for bodily injury, $200,000 per accident for bodily injury, and $50,000 per accident for property damage. Therefore, the insurer will pay $30,000 to B since it is within the per person limit for bodily injury. The amounts for A and C exceed the per person limit and the total per accident limit, so they will not be fully covered as stated in options A and C. The property damage to D is within the $50,000 limit, but this was not an option provided.

Question 3

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

Accepted Answer

Under the PAP (Personal Auto Policy) Liability Coverage, the "insured" is the person who causes the accident and/or damages, as they are the ones covered for liability.

Question 4

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?

Accepted Answer

Shaq's injuries could be covered by Antonius' Personal Auto Policy (PAP) Liability Coverage, as it was Antonius' fault, and Shaq's own PAP Medical Payments Coverage, which covers the policyholder regardless of who is at fault.

Question 5

Uninsured Motorist coverage:

Accepted Answer

Uninsured Motorist coverage protects the insured against financially irresponsible drivers who have no auto liability insurance. It does not provide first-dollar coverage for damage to the insured's own autos, double the premium for liability coverage, or require excellent driving records.

Question 6

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

Accepted Answer

PAP's Liability coverage will pay for bodily injuries of passengers in other cars and non-family members who are passengers in your car, but it will not cover bodily injuries of your spouse who is a passenger in your car at the time of the accident because they are considered to be a family member.

Question 7

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?

Accepted Answer

The insurer will pay the ACV of the vehicle minus the deductible, which is $13,922 - $500 = $13,422.

Question 8

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?

Accepted Answer

Since the accident occurred in Alaska, the minimum limits of liability required by law in Alaska apply. Annette's PAP will pay up to the stated limits of liability in her policy, but since the accident occurred in a state with higher requirements for minimum limits of liability, those limits will apply. Therefore, Annette's PAP will pay up to $50,000 for bodily injury liability per person, up to a total of $100,000 per accident, and up to $25,000 for property damage liability per accident.

Question 9

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?

Accepted Answer

The answer of You drink 19 beers to celebrate the...

Question 10

Which of the following is true?

Accepted Answer

All of the statements are true. Suing an uninsured motorist for damages may not result in a successful recovery as they may not have the financial means to pay for damages. To use your PAP's Uninsured Motorist coverage, you must prove that the uninsured motorist was at fault in the accident. If fault cannot be established, an arbitration process may be necessary to determine the payout from your insurer.

Question 11

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?

Accepted Answer

Mindy's PAP Liability coverage will cover both Mindy and the sorority because the accident occurred while she was driving on behalf of the sorority.

Question 12

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?

Accepted Answer

The answer of Latisha runs over a deer with her...

Question 13

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

Accepted Answer

Medical Payments coverage in the Personal Auto Policy (PAP) typically does not cover injuries sustained by the insured while operating a motorcycle.

Question 14

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

Accepted Answer

The answer of The PAP's Other than Collision Coverage would...

Question 15

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:

Accepted Answer

The answer of Tammy has a PAP with Medical Payments...

Question 16

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?

Accepted Answer

The answer of Nurse Goodbody works for Dr. Bond. While...

Question 17

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

Accepted Answer

Chuck's liability limits are 100/200/50. This means that the most his insurance company will pay per person for injuries is $100,000, with a total cap of $200,000 per incident, and $50,000 for property damage. 
Since Mama's claim is the largest at $125,000 and Chuck only has $100,000 coverage per person, Chuck's insurer will pay $100,000 for Mama's claim and exhaust the entire $200,000 limit of the policy. This leaves $75,000 in claims for Joe, Fred, Granny, and Bo. Since Chuck's policy has $100,000 of coverage per person and $200,000 in total coverage, there is still enough to cover the remaining claims. Therefore, the total amount Chuck's insurer will pay is $100,000 + $2,500 + $2,500 + $5,000 + $75,000 = $185,000.

Question 18

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

Accepted Answer

Medical Payments coverage is not meant to provide health insurance for the insured and his family. It is designed to provide coverage for medical expenses for guests injured in an automobile accident, to facilitate settlement for relatively small amounts of medical expense and to prevent guests injured in an automobile accident from suing their hosts.

Question 19

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

Accepted Answer

The Personal Automobile Policy typically does not cover motorcycles, even if they are owned by the insured.

Question 20

Underinsured Motorist coverage:

Accepted Answer

Underinsured Motorist coverage potentially pays the difference between the negligent driver's liability coverage amount and the injured party's UM limits. It is not the same as Uninsured Motorist coverage, which covers damages caused by drivers who have no insurance. It also does not cover property damage caused by the insured, as that would fall under liability coverage. Underinsured Motorist coverage specifically addresses situations where the at-fault driver has insurance but not enough to cover the full extent of the damages.

Quiz 12: The Personal Auto Policy