Insurance Car Insurance 3

Question 1

Which type of car insurance coverage is required by law in almost every U.S. state?

Accepted Answer

Liability

Answer

Liability insurance is mandated in nearly all states to ensure drivers can compensate others for damages they cause.

Question 2

What does a '100/300/100' liability policy limit mean?

Accepted Answer

$100K per person / $300K per accident / $100K property damage

Answer

The split limit notation means $100,000 per injured person, $300,000 total per accident for injuries, and $100,000 for property damage.

Question 3

What happens to your car insurance rate if you file multiple claims within a short period?

Accepted Answer

Rates typically increase at renewal

Answer

Multiple claims signal higher risk to insurers, which usually results in higher premiums at the next renewal.

Question 4

Which discount is most commonly offered by insurers to reward safe driving behavior?

Accepted Answer

Telematics or usage-based discount

Answer

Telematics programs track your actual driving habits and reward low-risk behavior like smooth braking and limited night driving.

Question 5

What does 'actual cash value' (ACV) mean when an insurer settles a total loss claim?

Accepted Answer

The market value of the vehicle at the time of loss, minus depreciation

Answer

ACV is the replacement cost of the vehicle minus depreciation, reflecting what the car was worth just before the loss.

Insurance Practice Test