Property & Casualty Insurance License Test Personal Automobile Policies Questions and Answers

Question 1

An insured with a standard Personal Auto Policy (PAP) uses their vehicle to transport passengers for a fee through a popular ride-sharing service.
While logged into the app and awaiting a passenger, they negligently cause an accident.
How will the Liability coverage (Part A) of their PAP typically respond?

Accepted Answer

The claim will be denied due to the livery conveyance exclusion.

Answer

The policy will provide full liability coverage for the damages.

Answer

Coverage will be provided, but only on an excess basis after the ride-sharing company's insurance pays.

Answer

The policy will cover the damages, but a special, higher deductible will apply.

Question 2

Which of the following losses to an insured's vehicle would be covered under Part D - Damage to Your Auto, specifically by Other Than Collision (Comprehensive) coverage?

Accepted Answer

The vehicle is damaged when it strikes a deer that runs into the road.

Answer

The vehicle rolls over after skidding on a patch of ice.

Answer

The vehicle's bumper is dented by a driver who backs into it in a parking lot and leaves the scene.

Answer

The vehicle is damaged when the insured misjudges a turn and hits a utility pole.

Question 3

An insured, who has a Personal Auto Policy (PAP) with Medical Payments coverage, is injured when they are struck by a car while jogging. How does their Medical Payments coverage apply to their injuries?

Accepted Answer

It will pay for reasonable and necessary medical expenses, regardless of who was at fault for the accident.

Answer

It will not apply because the insured was not occupying a vehicle at the time of the accident.

Answer

It will apply only if the driver of the car that struck them was uninsured.

Answer

It will only pay for expenses that are not covered by the insured's health insurance policy.

Question 4

An insured carries a Personal Auto Policy (PAP). They give their friend, who also has a PAP, permission to borrow their car. The friend causes an at-fault accident. How will the liability coverages of the two policies respond to the third-party claim?

Accepted Answer

The car owner's policy is primary, and the driver's policy is excess.

Answer

The driver's policy is primary, and the car owner's policy is excess.

Answer

Both policies will share the loss on a pro-rata basis based on their liability limits.

Answer

Only the car owner's policy will respond to the claim; the driver's policy provides no coverage.

Question 5

What is the primary function of Part C - Uninsured Motorist (UM) Coverage in a Personal Auto Policy?

Accepted Answer

To cover the insured's bodily injury expenses caused by an at-fault driver who lacks liability insurance.

Answer

To pay for property damage to the at-fault driver's vehicle.

Answer

To provide liability coverage for the insured if they are driving a vehicle they do not own.

Answer

To pay for the insured's medical expenses regardless of fault, similar to Medical Payments coverage.

Question 6

An insured drives their personal vehicle from Arizona into Mexico for a weekend vacation. While in Mexico, they cause an accident resulting in property damage and bodily injury to others. How will their standard, unendorsed US Personal Auto Policy respond?

Accepted Answer

The claim will be denied because the standard policy territory does not include Mexico.

Answer

The policy will provide coverage, but the limits will be reduced to the minimum required by Mexican law.

Answer

The claim will be covered in full, just as if the accident had occurred in the United States.

Answer

The policy will cover the property damage but exclude the bodily injury.