Car Insurance Flashcards

What does 'uninsured motorist coverage' protect you against?

Answer: Accidents caused by drivers with no insurance

Uninsured motorist coverage pays for your injuries and damages when the at-fault driver has no liability insurance.

Which factor most commonly causes car insurance premiums to increase after a policy renewal?

Answer: Adding a new driver to the policy

Adding a new driver, especially a young or inexperienced one, typically raises premiums due to increased risk.

What is the purpose of a 'declarations page' in a car insurance policy?

Answer: It summarizes key policy details like coverage types and limits

The declarations page is a summary document showing the insured, vehicle, coverage types, limits, and premium amounts.

Under a standard auto policy, which situation would typically NOT be covered by collision coverage?

Answer: Flood damage to your car

Flood damage is a comprehensive claim, not a collision claim, because it results from a natural event rather than a crash.

What does 'subrogation' mean in the context of car insurance?

Answer: The insurer's right to recover costs from the at-fault party after paying your claim

Subrogation allows your insurer to sue the at-fault driver or their insurer to recoup money paid out on your behalf.

If you lend your car to a friend and they cause an accident, which insurance policy typically pays first?

Answer: Your auto policy

In most states, insurance follows the car, so the vehicle owner's policy is primary when someone borrows the car.

What is 'gap insurance' designed to cover?

Answer: The difference between your car's ACV and the loan balance if it's totaled

Gap insurance covers the shortfall between the actual cash value an insurer pays and what you still owe on your auto loan.