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85 Cards in this Set

  • Front
  • Back

What is the purpose of Financial Responsibility Law?

To protect automobile victims.

What does P.A.P. stand for?

Personal Auto Policy

What does Coverage Part A stand for?

Personal Liability

What are the two ways you can have Coverage Part A?

Split Limits or Combine Single Limit

What do the first two parts in Split Limit apply to?

Example: 15/30/10

Body Injury (BI)

What does the last part in Split Limit apply to?

Example: 15/30/10

Property Damage (PD)

In the Split Limit example of 15/30/10, what does the 15 stand for?

It stands for Body Injury (BI) and per person

In the Split Limit example of 15/30/10, what does the 30 stand for?

It stands for Body Injury (BI) and per occurrence.

In the Split Limit example of 15/30/10, what does the 10 stand for?

It stands for the Property Damage (PD) and per occurrence.

What is it called by the state if you have Split Limit?

Access Limits

You could have avoided this by buying _________ _________ (higher-than-required limits) for a slightly higher premium.

Excess Limits

What is the minimum requirement that you must have if you have a Combined Single Limit policy?


What does C.S.L. stand for?

Combine Single Limit

Most Auto Liability policies are sold with Split Limits, However some insurers also offer _________ _________ __________ policies.

Combine Single Limit

A CSL is written with just _____ policy limit that applies to BI and PD together.


CSL plicy would need a minimum Liability policy limit of $40,000 to be the equivalent of a $15/$30/$10 _________ _________ policy.

Split Limit

CSL policies are better from the client's point of view, but they also _______ more and not all insurers offer them.


Auto Insurance Consideration. What are the Three Major Factors that define individual auto insurance policies?

Rates, Underwriting, Coverage

What all are considered for the Rates Factor?

Rates Classification based on age, gender, driving record, and territory.

Driving record is a major factor, as well. The worse the driving record, the _________ ______ _______.

Higher the rates

Most insurance companies have established __________ ____________ to be followed strictly by their agents in placing new Auto insurance policies with the company.

Underwriting Rules

For example, the underwriter may order a copy of the applicant's _________ ________ ________ to verify the applicant's stated driving record.

Motor Vehicle Report (MVR)

Underwriter may also order a __________ _________ _______ to verify employment or the character of the applicant. (Of course, when ordering this type of report, the underwriter must conform to all state and federal regulations under the _________ __________ ________ Act.)

Consumer Investigative Report

Fair Credit Reporting

It is important to note that unless a state exam question says otherwise, you should assume that the test question is asking about the __________ _________ __________, NOT the Commercial Auto Policy.

Personal Auto Policy (PAP)

What is the Structure of the Personal Auto Policy (PAP)

Part A - Liability

Part B - Medical Payments

Part C - Uninsured Motorists

Part D - Damage to Your Auto

Part E - Duties After an Accident

Part F - General Provisions

What is Part A - Liability?

The insurer will pay, up to the policy limits, for BI or PD to others, caused by any driver of a vehicle insured under the policy.

What is Part B - Medical Payments?

Pays medical and funeral expenses resulting from a covered event causing Bodily Injury to you and your passengers.

What is Part C - Uninsured Motorists?

Covers Bodily Injury to an insured caused by the owner or operator of an at fault uninsured vehicle.

What is Part D - Damage to Your Auto?

Covers your insured vehicle for damage by "Collision" and or "Other Than Collision," if either or both are declared.

What is Part E - Duties After an Accident?

Insured must notify the insurer as soon as possible after loss and must cooperate with insurer's investigation.

What is Part F - General Provisions?

Lays out various legal and financial obligations relating to both insurer and insured.

The ______________ ___________ tells who is insured, what type of property (auto) is insured, the policy limits and the policy period.

Declarations Page

What does UM stand for?

Uninsured Motorist

What does UIM stand for?

Under Insured Motorist

Coverage A pays out to ________.


Coverage C pays out to ________.


Coverage C only covers ________ _________ only!

Bodily Injury (BI)

What two parts are in Coverage D?

Collision and Other Than Collision or Comprehensive.

What is an example of Other Than Collision or Comprehensive.

Hitting a deer.

Someone Keys Your Car.

A Rock hits you window.

Part A - Liability Coverage

_________ _ _______ ________: Although the Insuring Agreement is a brief clause, it includes very broad coverage.

Part A Insuring Agreement

We will pay damages for "________ ________" or "_________ ________" for which any "Insured" becomes legally responsible because of an auto accident.

Bodily Injury (BI) or Property Damage (PD)

According to the PAP definition, what does "Bodily Injury (BI)" mean?

Bodily harm, Sickness or disease, including death that may result.

According to the PAP definition, what does "Property Damage (PD)" mean?

Physical injury to, destruction of, or loss of use of tangible property.

The term "insured," however, is defined as:

- "You" (the named insured or spouse) or and "family member" involved in the ownership, maintenance, or use of any auto or trailer

- Any person using any "covered auto" (as defined in the Definitions section)

-For a "covered auto", any person or organization but only with respect to legal responsibility for acts or omissions of a person covered by the policy.

__________ __________ is defined as a person related to you by blood, marriage, or adoption who is a resident of your household, including a ward or foster child.

Family Member

How do we know what a "covered auto" is? According to the Definitions, it is:

Any Vehicle shown on the Declarations Page.

Except for collision and other than collision coverages, any additional auto newly acquried during the policy period is covered right away for the broadest liability coverage provided for any vehicle already shown in the declarations as long as you add it to the policy within ____ days.


Except for collision and other than collision coverages, if a newly acquired vehicle replaces a vehicle already shown in the declarations, ________ _________ is automatically provided without you having to add it to the policy.

Liability Coverage

For collisions and other than collision coverages for a newly acquired auto, coverage begins on the date you become the owner. The newly acquired auto will have the broadest physical damage coverage currently provided for any auto shown in the declarations, provided you add the newly acquired auto to your policy within _____ _____.

14 days

Any _________ you own (automatic Liability coverage, does not need to be declared)


Any ___________ vehicle used as a temporary substitute for any other vehicle described above that is out of normal use due to breakdown, repair, servicing, loss, or destruction (such as a loaner from a dealer while you car is being repaired)


However, if none of the vehicles currently shown in the declarations have physical damage coverage, you must report the newly acquired auto within __ days of the time you become the owner in order for collision and other than collision coverages to apply.

4 days

The Part A Insuring Agreement, also says:

We will settle or defend... any claim or suit... In addition to our limit of liability, we will pay all defense costs we incur.

Cost of defense is in addition to the limits, but is not ____________ ___________.

Supplementary Payments

Part A Supplementary Payments

Several Auto Liability Supplementary Payments are included in the PAP at no extra premium charge, and they are in addition to the policy limit.

The policy will pay up to $250 for the cost of Bail Bonds required because of an accident that results in BI or PD covered by the policy, including those for related traffic-law violations. Remember, this clause pays just the cost of the Bail Bond, not the traffic fines involved.

Bail Bonds

The policy will pay the premiums on Appeal Bonds and interest accruing after a judgment is entered in any suit the insurance company defends on your behalf.

Appeal Bonds and Interest

The company will pay up to $200 per day for your lost earnings if it requires you attendance at hearings or trials. It will not pay for other income you lose, but will pay other reasonable expenses you incur at its request.

Loss of Earnings

Part A Supplementary Payments are what?

-Bail Bonds (up to $250)

-Appeal Bonds and Interest

-Loss of Earnings (up to $200 per day)

Part A Exclusions:

Like all policies, Auto Liability has Exclusions, things that are never covered.

Part A Exclusions are what?

-Intentional Acts

-Your Own Property In Transit

-Injury to Employees

-Taxi or Livery

-Auto Business

-Commercial Usage

-Using a Vehicle Without Permission

-Non-owned Vehicle Furnished for your regular use

Part A Out-Of-State Coverage:

The PAP has a provision that states it will automatically conform to the state laws of any state in which you happen to be driving.

Part A Financial Responsibility:

The PAP is acceptable as Proof of Financial Responsibility in all states.

Part B - Medical Payments Coverage

Part B Insuring Agreement:

Auto Medical is an optional coverage.

Reasonable expenses incurred, within three years from the date of the accident, for necessary medical and funeral services because of "bodily injury:"

1. Caused by Accident; and

2. Sustained by an "Insured"

The Insuring Agreement goes on to define "insured" in "Part B" as:

1. The named insured, spouse, or any family member while occupying, or as a pedestrian when struck by, a motor vehicle "designed for use mainly on public roads" (not necessarily one insured by the policy) or by a trailer.

2. Any other person who is occupying a covered auto.

Part B Exclusions:

Most of the Exclusions in Part B are similar to those in Part A.

Part B Limits of Liablility:

Policy Limits on Auto Medical are usually fairly low, such as $5,000 per person.

Part C Insuring Agreement:

Uninsured Motorist Coverage may be optional or mandatory, depending up the state. It also covers you the the event you are injured by a hit-and-run driver.

The Insuring Agreement for Part C says, in part:

We will pay damages which an "insured" is legally entitled to recover from the owner or operator of an "uninsured motor vehicle" because of "bodily injury"

(Part C) The "insured" in this case is you or a family member or any other person occupying your covered auto. The PAP defines an "uninsured motor vehicle" as a land motor vehicle of any type:

1. To which no BI Liability policy applies at the time of the accident

2. To which a BI Liability policy does apply but is written for lower limits than those specified by the Financial Responsibility law of the state.

3. That is a hit-and-run vehicle whose operator or owner cannot be identified.

4. To which a BI Liability policy applies, but the insurer either denies coverage or is insolvent.

Remember that Coverage Part _____ covers Bodily Injury Only. It does not cover damage done to your car by the uninsured motorist.

Part C

(Part D - Coverage for damage to your auto)

Part D Insuring Agreement:

Sometimes called Full Coverage or Comprehensive and Collision, this optional coverage is purchased to protect your own car.

What is Collision?

Means to upset of "your covered auto" or its impact with another vehicle or object. Loss covered by the following is considered other than "collision:"

What 10 items considered Other Than Collision, which include:

1.Missiles or falling objects

2. Fire

3.Theft or larceny

4.Explosion or earthquake

5. Windstorm

6.Hail, water, or flood

7. Malicious mischief or vandalism

8. Riot or civil commotion

9. Contact with bird or animal

10. Breakage of glass

Other Than Collision is consider an _______ ________ coverage.


Part D Transportation Expenses:

An important Additional Coverage under Part D is for Transportation Expenses incurred by you in the event of "total theft" of your covered auto. Coverage does not begin until 48 hours after the theft and it ends a maximum of 30 days later, by which time your car will either be recovered or presumed permanently missing. $20 per day Max of $600

Part D Exclusions:

The list of Exclusions for Part D is extensive. It consists of "wear and tear" types of loss, items not permanently installed, freezing of the engine block, mechanical or electrical breakdown and road damage to tires.

Part D Limit of Liability:

If a claim occurs under Part D, the company has the option of paying the ACV (Actual Cash Value) of the stolen or damaged property or repairing or replacing the car, whichever is cheaper for the insurance company.

Part E of the PAP specifies the ________________________________. This part requires that Notice of Claim be filed promptly and that the insured cooperate in the investigation, settlement, or defense of any claim or suit.

duties of the insured after a loss.

Part E also requires the insured to notify the police promptly if theft or a hit-and-run driver is involved, and to take reasonable steps after a loss to protect the covered auto from further loss. These duties are actually _____________ contained in the policy.


Part F of the PAP contains ___________ ____________, such as the Policy Territory, which is specified as the United States, its territories and possessions, Puerto Rico, and Canada. The policy also applies to losses involving the covered auto while it is being transported between ports therof.

General Provsions

If the cancellation is for nonpayment of premium, the insured must be given at least ____ ____ .

10 Days Notice

For _______________ or any cancellation except for nonpayment, more notice is generally required. Of course, the insured may cancel at any time, by giving advance written notice or by returning the policy to the insurance company.


What are the different PAP Endorsements?

1. Named Nonowner

2. Miscellaneous-Type Vehicles

3. Towing and Labor

4. Mexico Coverage

5. Extended Non-owned Auto Coverage for a Named Individual

6. Joint Ownership Coverage