CAIA Policy Coverage and Exclusions 5 — Questions and Answers
Question 1: 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?
- Personal auto policy covers fully since no passenger was present
- A coverage gap may exist unless a rideshare endorsement or TNC policy is in place (Correct answer)
- The rideshare company's commercial policy provides full coverage
- Collision coverage automatically applies during all app-on periods
Correct 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.
Question 2: Which term describes the maximum dollar amount an insurer will pay per accident for property damage liability?
- Per-occurrence aggregate limit
- Single-limit liability
- Per-accident property damage limit (Correct answer)
- Combined single limit
Correct 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.
Question 3: An insured's vehicle is struck by a hit-and-run driver who fled the scene. Which coverage typically responds?
- Collision coverage only
- Uninsured motorist coverage, treated as an uninsured driver (Correct answer)
- Comprehensive coverage since no contact was made
- Property damage liability of the insured
Correct 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.
Question 4: The insurer settles a claim and then pursues the at-fault third party for reimbursement. This right is called:
- Indemnification
- Subrogation (Correct answer)
- Salvage recovery
- Contribution
Correct answer: Subrogation
Subrogation is the insurer's legal right to recover claim payments from the negligent third party after compensating the insured.
Question 5: Under a split-limit liability policy expressed as 100/300/100, what does the middle number represent?
- Maximum per-person bodily injury payment
- Maximum per-accident bodily injury payment for all persons (Correct answer)
- Maximum property damage payment per accident
- Total aggregate limit for the policy period
Correct 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.
Question 6: Which exclusion would bar coverage for damage caused when the insured uses their vehicle to transport hazardous materials commercially?
- Racing exclusion
- Business use / commercial activity exclusion (Correct answer)
- Government action exclusion
- Named driver exclusion
Correct 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.
Question 7: An adjuster discovers the insured misrepresented prior accidents on the application. Which legal doctrine allows the insurer to void the policy from inception?
- Estoppel
- Rescission due to material misrepresentation (Correct answer)
- Waiver of conditions
- Subrogation transfer
Correct answer: Rescission due to material misrepresentation
Material misrepresentation on an insurance application entitles the insurer to rescind the policy as if it never existed.
CAIA Policy Coverage and Exclusions 5
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?