Insurance Car Insurance 5

Question 1

What does 'personal injury protection' (PIP) cover in a no-fault state?

Accepted Answer

Your own medical expenses and lost wages regardless of fault

Answer

PIP pays for your medical bills, lost wages, and related costs after an accident without requiring you to prove the other driver was at fault.

Question 2

How does raising your deductible from $500 to $1,000 generally affect your car insurance premium?

Accepted Answer

The premium decreases because you are sharing more of the risk

Answer

A higher deductible means you pay more out of pocket per claim, which reduces the insurer's exposure and lowers your premium.

Question 3

Which practice is considered 'insurance fraud' in the context of car insurance?

Accepted Answer

Filing a claim for pre-existing damage not related to the covered accident

Answer

Claiming pre-existing damage under a new incident is misrepresentation, which constitutes insurance fraud and is illegal.

Question 4

What does 'SR-22' refer to in car insurance?

Accepted Answer

A certificate of financial responsibility filed by an insurer to confirm minimum liability coverage

Answer

An SR-22 is a form your insurer files with the state to prove you carry the required liability coverage, usually ordered after serious violations.

Question 5

In a 'fault' (tort) state, who is generally responsible for paying damages after a car accident?

Accepted Answer

The driver determined to be at fault and their insurer

Answer

In fault states, the at-fault driver's liability insurance pays for the other party's injuries and property damage.

Insurance Practice Test