Deck 13: Risk Management for Auto Ownerspart I

Question 1

The PAP may be canceled in the middle of the policy term on due notice by either party for any reason.

Answer 1

False

Question 2

Financial responsibility laws provide adequate penalties for failing to carry liability insurance.

Answer 2

False

Question 3

Under the tort liability system for settling auto accident claims, small losses are undercompensated and large losses are overcompensated.

Answer 3

False

Question 4

Automobile property damage claims have risen faster than bodily injury claims.

Question 5

Statistical evidence indicates that the age of drivers has little to do with accident frequency.

Question 6

$10,000/$20,000/$5,000 means that the maximum that can be paid to any one individual for a liability claim arising from one accident is $15,000.

Question 7

Coverage for nonowned automobiles is as broad as for owned automobiles.

Question 8

The PAP is excess over all other valid and collectible liability insurance on nonowned automobiles.

Question 9

A pedestrian who owns a PAP and who is injured by an automobile can collect under his or her coverage for loss other than collision.

Question 10

If a parked car is damaged by a hit-and-run driver, the owner of the car can collect under his or her coverage for loss other than collision.

Question 11

A car damaged by a falling airplane part is an example of a loss covered by the collision portion of the PAP.

Question 12

The subrogation provision of the PAP does not apply to the medical payments coverage.

Question 13

The PAP covers theft of personal articles left in an automobile.

Question 14

Death rates per registered vehicle have been rising since 1925.

Question 15

The PAP covers you and your spouse.

Question 16

An auto repair person who drives your auto is insured by your PAP.

Question 17

In the PAP, auto medical payments do not pay for injuries covered by workers' compensation.

Question 18

If you have an accident with a truck owned by a corporation that self-insures, that vehicle is considered uninsured by the uninsured motorist coverage.

Question 19

Financial responsibility laws are often used to attempt to solve the problem of the uninsured motorist.

Question 20

A major weakness of the financial responsibility law is that the penalty for noncompliance is too strong and courts will not apply it.

Question 21

CBs are excluded from coverage in the PAP.

Question 22

The PAP covers property in the insured's care, custody, and control.

Question 23

Individuals with high rating factors are more likely to choose higher collision deductibles than those with low rating factors.

Question 24

Match the descriptions with their terms:

-_________________ is considered to be the upset of your auto or its impact with another vehicle or object.

A) collision
B) financial responsibility laws
C) losses other than collision
D) medical payments
E) no-fault
F) nonstandard risk
G) personal automobile policy
H) underinsured motorists endorsement
I) uninsured motorist endorsement
J) uninsured motorist insurance
K) unsatisfied judgment fund

Question 25

Match the descriptions with their terms:

-The _________________ is used to insure private passenger cars, station wagons, jeeps, pickups, and farm trucks.

A) collision
B) financial responsibility laws
C) losses other than collision
D) medical payments
E) no-fault
F) nonstandard risk
G) personal automobile policy
H) underinsured motorists endorsement
I) uninsured motorist endorsement
J) uninsured motorist insurance
K) unsatisfied judgment fund

Question 26

Match the descriptions with their terms:

-When a person is injured in an accident in your car, _______________ will pay that person's hospital bills whether or not you are negligent.

A) collision
B) financial responsibility laws
C) losses other than collision
D) medical payments
E) no-fault
F) nonstandard risk
G) personal automobile policy
H) underinsured motorists endorsement
I) uninsured motorist endorsement
J) uninsured motorist insurance
K) unsatisfied judgment fund

Question 27

Match the descriptions with their terms:

-_________________ covers all losses to the insured vehicle other than collision.

A) collision
B) financial responsibility laws
C) losses other than collision
D) medical payments
E) no-fault
F) nonstandard risk
G) personal automobile policy
H) underinsured motorists endorsement
I) uninsured motorist endorsement
J) uninsured motorist insurance
K) unsatisfied judgment fund

Question 28

Match the descriptions with their terms:

-_________________ require that a motorist involved in an accident must furnish proof of financial responsibility.

A) collision
B) financial responsibility laws
C) losses other than collision
D) medical payments
E) no-fault
F) nonstandard risk
G) personal automobile policy
H) underinsured motorists endorsement
I) uninsured motorist endorsement
J) uninsured motorist insurance
K) unsatisfied judgment fund

Question 29

Match the descriptions with their terms:

-A/An _________________ is set up by a state to pay automobile accident settlements that cannot be collected by any other means.

A) collision
B) financial responsibility laws
C) losses other than collision
D) medical payments
E) no-fault
F) nonstandard risk
G) personal automobile policy
H) underinsured motorists endorsement
I) uninsured motorist endorsement
J) uninsured motorist insurance
K) unsatisfied judgment fund

Question 30

Match the descriptions with their terms:

-The _________________ can protect an insured driver who is injured by an uninsured driver.

A) collision
B) financial responsibility laws
C) losses other than collision
D) medical payments
E) no-fault
F) nonstandard risk
G) personal automobile policy
H) underinsured motorists endorsement
I) uninsured motorist endorsement
J) uninsured motorist insurance
K) unsatisfied judgment fund

Question 31

Match the descriptions with their terms:

-Insurance that pays the insured when the auto policy's limits of the negligent third party are inadequate is entitled _________________.

A) collision
B) financial responsibility laws
C) losses other than collision
D) medical payments
E) no-fault
F) nonstandard risk
G) personal automobile policy
H) underinsured motorists endorsement
I) uninsured motorist endorsement
J) uninsured motorist insurance
K) unsatisfied judgment fund

Question 32

Match the descriptions with their terms:

-_________________ pays for losses even though there is no negligent act involved.

A) collision
B) financial responsibility laws
C) losses other than collision
D) medical payments
E) no-fault
F) nonstandard risk
G) personal automobile policy
H) underinsured motorists endorsement
I) uninsured motorist endorsement
J) uninsured motorist insurance
K) unsatisfied judgment fund

Question 33

Match the descriptions with their terms:

-_________________ pays for the insured's bodily injury that results from an accident with another vehicle if the other driver is negligent or uninsured.

A) collision
B) financial responsibility laws
C) losses other than collision
D) medical payments
E) no-fault
F) nonstandard risk
G) personal automobile policy
H) underinsured motorists endorsement
I) uninsured motorist endorsement
J) uninsured motorist insurance
K) unsatisfied judgment fund

Question 34

Match the descriptions with their terms:

-In personal automobile rating, a/an _________________ often refers to persons with poor driving records.

A) collision
B) financial responsibility laws
C) losses other than collision
D) medical payments
E) no-fault
F) nonstandard risk
G) personal automobile policy
H) underinsured motorists endorsement
I) uninsured motorist endorsement
J) uninsured motorist insurance
K) unsatisfied judgment fund

Question 35

Which of the following claims would not be paid under automobile loss-other-than-collision coverage?

A) the car is sprayed with paint as it passes under a bridge being painted,
B) gasoline spills over the engine and causes a fire,
C) the windshield is broken by a flying rock,
D) the car rolls over a parking curb and damages the oil pan,
E) all are covered by loss other than collision.

Question 36

Those who cause damage to others and fail to purchase automobile liability insurance may be subject to which of the following penalties under most state financial responsibility laws?

A) a jail sentence or fine,
B) capital punishment,
C) loss of the right to drive for a limited period,
D) permanent loss of the right to drive,
E) there is no penalty.

Question 37

Doe has the personal automobile policy with liability limits as follows: $25,000/$50,000 BI and $10,000 PD. Doe is held liable in an accident in which he must pay for bodily injuries as follows: A, $15,000, B, $5,000, and C, $30,000. His contract will reimburse him to the extent of

A) $25,000,
B) $30,000,
C) $45,000,
D) $50,000,
E) none of these.

Question 38

If you increased your auto BI liability limits from $25,000 to $100,000, your premium would increase about

A) 4.1 times,
B) 2.1 times,
C) 1.33 times,
D) 1.13 times,
E) none of these.

Question 39

A basic part of the PAP is

A) collision,
B) health insurance,
C) product liability.

Question 40

An insurer may cancel a policy before the anniversary date if the insured

A) is convicted of criminal negligence,
B) receives a parking ticket,
C) has an accident.

Question 41

Medical payments in an automobile policy pay for

A) loss of income,
B) injuries of insured if hit by a car as a pedestrian,
C) occupants of the other car.

Question 42

If Long has an accident with three passengers in his car and has medical payment limits of $5,000, the maximum his policy will pay is

A) $5,000,
B) $15,000,
C) $20,000.

Question 43

An example of a covered auto in the PAP is

A) an owned trailer,
B) an owned taxi,
C) a van in which you deliver flowers to your customers.

Question 44

An example of a family member as defined in the PAP is

A) your mother living next door,
B) your foster child,
C) your father who came for a visit.

Question 45

Which of the following items is not excluded in the PAP?

A) a motorcycle,
B) an auto furnished by your employer,
C) a dump truck owned by someone else that you use because your car is being repaired.

Question 46

The covered property endorsement covers

A) trailers,
B) custom work in a van,
C) household personal property of the insured.

Question 47

Which of the following items is not a rating factor?

A) age,
B) sex,
C) race.