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 rideshare driver is logged into the app but has not yet accepted a ride request when an accident occurs. Which coverage situation is most likely?
Answer: A coverage gap may exist unless a rideshare endorsement or TNC policy is in place
During Phase 1 (app on, no ride accepted), many personal auto policies exclude coverage, creating a gap unless a rideshare endorsement is added.
Which term describes the maximum dollar amount an insurer will pay per accident for property damage liability?
Answer: Per-accident property damage limit
The per-accident property damage limit caps the insurer's payment for all property damage arising from a single covered accident.
An insured's vehicle is struck by a hit-and-run driver who fled the scene. Which coverage typically responds?
Answer: Uninsured motorist coverage, treated as an uninsured driver
Most states treat hit-and-run drivers as uninsured, allowing the victim to claim under their uninsured motorist coverage.
The insurer settles a claim and then pursues the at-fault third party for reimbursement. This right is called:
Answer: Subrogation
Subrogation is the insurer's legal right to recover claim payments from the negligent third party after compensating the insured.
Under a split-limit liability policy expressed as 100/300/100, what does the middle number represent?
Answer: Maximum per-accident bodily injury payment for all persons
In a split-limit policy, the middle figure ($300,000) is the per-accident cap for total bodily injury payments to all claimants.
Which exclusion would bar coverage for damage caused when the insured uses their vehicle to transport hazardous materials commercially?
Answer: Business use / commercial activity exclusion
Commercial hauling of hazardous materials is a business use that falls outside personal auto policy coverage under the business use exclusion.
An adjuster discovers the insured misrepresented prior accidents on the application. Which legal doctrine allows the insurer to void the policy from inception?
Answer: Rescission due to material misrepresentation
Material misrepresentation on an insurance application entitles the insurer to rescind the policy as if it never existed.