Policy Coverage and Exclusions Flashcards
7 cards from real CAIA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Policy Coverage and Exclusions flashcards as text
A vehicle is declared a total loss. The insured still owes more on their auto loan than the vehicle's ACV. Which optional coverage bridges this gap?
Answer: GAP (Guaranteed Asset Protection) coverage
GAP coverage pays the difference between the vehicle's ACV settlement and the remaining loan or lease balance.
Which exclusion prevents a standard auto policy from covering a vehicle used in a street race sanctioned by no official body?
Answer: Racing or speed contest exclusion
Auto policies universally exclude losses occurring while the vehicle is used in racing or speed contests.
A family member not listed on the policy regularly drives the insured vehicle. Under the PAP, are they covered?
Answer: Yes, resident family members are typically covered as 'insureds'
The PAP's definition of 'insured' includes family members residing in the same household who use a covered auto.
Which statement best describes the 'deductible' in auto physical damage coverage?
Answer: The amount the insured pays out-of-pocket before insurance pays
The deductible is the insured's portion of a covered loss paid before the insurer contributes.
An insured's custom stereo worth $2,000 is stolen from the vehicle. The standard auto policy pays only $200. Why?
Answer: Non-factory installed equipment often has a sub-limit under standard policies
Standard PAPs typically limit coverage for custom or aftermarket equipment to a specified sub-limit unless a special endorsement is added.
Under Medical Payments (MedPay) coverage, who is typically eligible for benefits?
Answer: Any occupant of the covered vehicle, regardless of fault
MedPay covers medical expenses for the named insured and any occupants of the covered vehicle, regardless of who caused the accident.
A claimant seeks damages for a car accident occurring five years ago. The insured's policy has long since expired. Can the insurer deny coverage?
Answer: Yes, occurrence policies only cover losses during the active policy period
Auto liability policies are occurrence-based, covering only accidents that happen during the active policy period.