Insurance Car Insurance 4

Question 1

Under what circumstance can an insurer legally cancel your car insurance policy mid-term?

Accepted Answer

Your driver's license was suspended

Answer

A license suspension is a material change in risk that gives most insurers legal grounds to cancel coverage mid-term.

Question 2

What is 'rental reimbursement coverage' in a car insurance policy?

Accepted Answer

An add-on that pays for a rental car while your vehicle is being repaired after a covered claim

Answer

Rental reimbursement coverage pays up to a daily limit for a rental car while your own vehicle is out of service due to a covered loss.

Question 3

Which of the following vehicles typically requires a separate 'classic car' policy rather than a standard auto policy?

Accepted Answer

A 25-year-old restored muscle car driven occasionally to shows

Answer

Classic and collector cars appreciate over time and are used differently than daily drivers, so they need specialized agreed-value policies.

Question 4

What is 'medical payments coverage' (MedPay) in auto insurance?

Accepted Answer

Coverage that pays your medical bills regardless of who caused the accident

Answer

MedPay covers medical expenses for you and your passengers after an accident, regardless of fault.

Question 5

If you move to a new state, what should you do regarding your car insurance?

Accepted Answer

Notify your insurer and update the policy to meet the new state's minimum requirements

Answer

Each state has its own minimum coverage requirements, and your insurer must be notified of address changes to ensure compliance and accurate rating.

Insurance Practice Test