Insurance Product Knowledge Flashcards
7 cards from real AFIP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Insurance Product Knowledge flashcards as text
A customer asks about 'agreed value' coverage for a collectible vehicle. Which statement is correct about agreed value policies?
Answer: The insurer and insured agree on the vehicle's value upfront and that amount is paid in full at total loss without depreciation
With an agreed value policy, the insurer commits to paying the pre-agreed amount in a total loss scenario, eliminating depreciation disputes.
A VSC administrator uses a 'direct-pay' authorization process. What does this mean for a repair facility?
Answer: The administrator pays the repair facility directly after authorization, so the customer owes only their deductible
In a direct-pay arrangement, the VSC administrator pays the authorized repair amount directly to the repair shop, minimizing out-of-pocket expense for the customer.
What is the main function of a Lease Wear & Tear protection product?
Answer: To pay charges assessed by the lessor at lease-end for damage beyond normal wear standards
Lease Wear & Tear coverage pays the end-of-lease charges the lessor bills for damage exceeding their normal wear guidelines, such as scratches, dents, and interior damage.
Under AFIP standards, which of the following represents a best practice when presenting F&I products to a customer?
Answer: Disclose the cost and benefit of each product clearly, allowing the customer to make an informed decision
AFIP emphasizes transparent, compliant product presentation where customers understand costs and benefits before making a purchase decision.
A vehicle is stolen and not recovered. The customer has GAP coverage and a $1,000 deductible on their primary auto policy. How is the GAP claim typically calculated?
Answer: GAP pays the difference between the ACV settlement from primary insurance and the loan balance, and may also cover the deductible up to a stated limit
GAP covers the shortfall between the ACV payout and the loan balance, and many GAP products also include a deductible benefit up to a specified limit (commonly $1,000).
Which VSC contract type places the dealer as the obligor responsible for paying covered repairs?
Answer: Dealer-obligor (retail reserve) program
In a dealer-obligor program, the dealer is contractually responsible for paying claims, which exposes the dealer to financial risk if reserves are insufficient.
A customer returns to the dealership to cancel a VSC 90 days after purchase. The contract states a $75 cancellation fee applies after 30 days. Who typically processes this cancellation?
Answer: The selling dealer, who submits the cancellation to the administrator or insurer for a refund calculation
The selling dealer initiates the cancellation request with the administrator or insurance company, which then calculates the prorated refund minus any applicable cancellation fee.