P&C Personal Automobile Policies 3

Question 1

Personal Injury Protection (PIP) coverage is primarily associated with:

Accepted Answer

No-fault auto insurance states, where PIP pays the insured's own medical bills and lost wages regardless of fault

Answer

PIP is the coverage required in no-fault auto insurance states; it pays for the insured's medical expenses, lost wages, and sometimes funeral costs and essential services regardless of who caused the accident.

Question 2

What is the purpose of a 'named non-owner policy' in auto insurance?

Accepted Answer

To provide liability coverage to an individual who does not own a car but regularly drives non-owned vehicles

Answer

A named non-owner policy provides personal auto liability coverage to an individual who does not own a vehicle but occasionally or regularly drives vehicles they do not own, such as rentals or borrowed cars.

Question 3

Under the PAP, which of the following situations would typically NOT be covered under Part A (Liability)?

Accepted Answer

The insured intentionally drives into a neighbor's fence after an argument

Answer

Intentional acts are excluded from liability coverage; an insured who deliberately causes damage cannot collect under the policy, since insurance is designed to cover accidental losses.

Question 4

Under a personal auto policy, which party is covered for a loss that occurs while the named insured's covered auto is being used by a mechanic test-driving the vehicle?

Accepted Answer

The named insured's PAP generally excludes coverage for vehicles used by auto repair shops, deferring to the shop's garagekeepers and garage liability coverage

Answer

The PAP typically excludes coverage when a covered auto is in the custody of someone in the auto business (repair shop, dealer) who is using it in connection with their business, deferring to the garage's commercial insurance.

Question 5

The 'other insurance' provision in a PAP typically provides that coverage for a non-owned auto is:

Accepted Answer

Excess over any other valid and collectible insurance on the non-owned vehicle

Answer

When an insured drives a non-owned auto (such as a rental or borrowed car), the PAP's liability coverage is typically excess over the primary coverage that applies to the vehicle itself.

Property & Casualty Insurance License Test Practice Test

Property & Casualty Insurance License Test Practice Test

P&C Personal Automobile Policies 3