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Question 1Insurance Principles and Regulation

Under the McCarran-Ferguson Act, how is the regulation of insurance allocated between state and federal government?

  1. States may regulate insurance only when a federal statute expressly authorizes state action.
  2. Insurance is regulated exclusively by federal agencies because it involves interstate commerce.
  3. Primary regulatory authority rests with the states, and federal antitrust laws apply only to the extent that states do not regulate the business of insurance. Correct answer.
  4. Insurance is exempt from both state and federal regulation.

Explanation

The McCarran-Ferguson Act (1945) declared that continued state regulation of insurance is in the public interest and exempted the business of insurance from most federal antitrust law to the extent it is regulated by the states. Federal law still applies where states have not regulated.

Question 2Insurance Principles and Regulation

For property insurance, when must the insured have an insurable interest?

  1. Only at the time the application is submitted.
  2. Insurable interest is not required for property insurance.
  3. Continuously from application through the loss and afterward.
  4. At the time of the loss. Correct answer.

Explanation

In property insurance the insured must have an insurable interest at the time of loss, because the purpose is to indemnify actual financial loss. In life insurance, by contrast, insurable interest is generally required at inception.

Question 3Insurance Principles and Regulation

The principle of indemnity in property-liability insurance means that the insured is:

  1. Restored to approximately the pre-loss financial position, but no better. Correct answer.
  2. Indemnified by the state guaranty association for all losses.
  3. Paid a fixed contractual amount regardless of the size of the loss.
  4. Entitled to profit from a loss as a return on premiums paid.

Explanation

Indemnity aims to place the insured back in roughly the same financial position as before the loss, preventing gain from insurance. This principle underpins limits, deductibles, and actual cash value provisions.

Question 4Insurance Principles and Regulation

Incurred but not reported (IBNR) reserves are established to fund:

  1. Losses that have occurred but have not yet been reported to the insurer. Correct answer.
  2. Future premium taxes owed to the state.
  3. Claims already reported and currently being adjusted.
  4. Refunds of unearned premium on cancelled policies.

Explanation

IBNR reserves cover the liability for claims that have happened but are unknown to the insurer as of the valuation date. They are estimated actuarially because neither the count nor the severity is yet known.

Question 5Insurance Principles and Regulation

Which statement correctly describes a mutual insurer?

  1. It is owned and operated by a state government.
  2. It must be organized as a fraternal benefit society.
  3. It is owned by shareholders, who receive dividends from profits.
  4. It is owned by its policyholders, who may receive dividends. Correct answer.

Explanation

A mutual insurer is owned by its policyholders rather than shareholders, and eligible policyholders may receive dividends reflecting favorable results. Stock insurers are the form owned by shareholders.

Question 6Insurance Principles and Regulation

To establish a prima facie case of negligence, a claimant generally must prove duty, breach of duty, proximate cause, and:

  1. An intent to cause harm.
  2. Actual damages. Correct answer.
  3. The existence of a written contract.
  4. A controlling strict liability statute.

Explanation

Negligence requires duty, breach, causation, and damages. Without actual damages the claim fails even if the other elements are established.

Question 7Insurance Principles and Regulation

Under a 40% quota share reinsurance treaty, the reinsurer:

  1. Pays only the portion of losses that exceeds a stated retention.
  2. Shares 40% of the premiums and 40% of the losses within the treaty's scope. Correct answer.
  3. Responds only to catastrophic events.
  4. Receives no premium from the ceding insurer.

Explanation

Quota share is proportional reinsurance in which the reinsurer takes a fixed percentage of both premium and losses. The ceding insurer retains the remaining percentage and typically receives a ceding commission.

Question 8Insurance Principles and Regulation

Insurance policies are commonly described as contracts of adhesion because:

  1. Both parties negotiate each policy term on equal footing.
  2. They only bind the insured after a loss has occurred.
  3. The insurer drafts the terms and the insured generally has little ability to negotiate them. Correct answer.
  4. They are unenforceable until a court approves their terms.

Explanation

A contract of adhesion is prepared by one party and offered on a take-it-or-leave-it basis, which is why ambiguities in insurance contracts are typically construed against the drafter. The insured accepts or rejects the standard form.

Question 9Insurance Principles and Regulation

The doctrine of utmost good faith requires an insurance applicant to:

  1. Submit to an annual financial audit by the insurer.
  2. Pay all premiums before any coverage can attach.
  3. Post a surety bond as security for the policy.
  4. Disclose material facts needed by the insurer to evaluate the risk. Correct answer.

Explanation

Utmost good faith obligates both parties, especially the applicant, to disclose material information relevant to underwriting. Failure to do so can give the insurer grounds to rescind or deny coverage.

Question 10Insurance Principles and Regulation

How does a warranty differ from a representation in insurance underwriting?

  1. A warranty is a promise that a stated fact is true, and a material breach can void coverage. Correct answer.
  2. A warranty is an oral statement that cannot be enforced.
  3. A warranty applies only in life insurance.
  4. A warranty is a statement believed to be true but not guaranteed.

Explanation

A representation is a statement believed true to the best of the applicant's knowledge, while a warranty is a promise or condition that something is true. A material breach of warranty can allow the insurer to avoid the contract, although many states have softened this rule.

Question 11Insurance Principles and Regulation

An insurer may be bound by a producer's acts under apparent authority when:

  1. The producer acts as a fiduciary for the insured.
  2. A third party reasonably believes, based on the insurer's conduct, that the producer has authority. Correct answer.
  3. The producer holds express written authority in the agency agreement.
  4. The insurer ratifies the producer's unauthorized act after the fact.

Explanation

Apparent authority arises from the insurer's manifestations to third parties that lead them reasonably to believe the producer is authorized. The insurer can be bound even without actual authority if the belief is reasonable.

Question 12Insurance Principles and Regulation

Surplus lines insurance is typically used when:

  1. The insured wants premium subsidies from a state guaranty fund.
  2. Federal law mandates a specific coverage form.
  3. The insurer is a licensed domestic company writing standard business.
  4. A risk cannot be placed with insurers authorized to do business in the state. Correct answer.

Explanation

Surplus lines markets allow specially licensed brokers to place coverage with nonadmitted insurers when admitted carriers will not accept the risk. These policies generally are not backed by state guaranty funds.

Question 13Insurance Principles and Regulation

State insurance guaranty associations generally respond when:

  1. An unlicensed surplus lines insurer becomes insolvent.
  2. A policyholder files for personal bankruptcy.
  3. A reinsurer disputes a cession with the ceding company.
  4. A licensed insurer becomes insolvent and cannot pay covered claims, subject to statutory limits. Correct answer.

Explanation

Guaranty associations protect policyholders of insolvent licensed insurers by paying covered claims up to statutory caps. They are funded through assessments on member insurers.

Question 14Insurance Principles and Regulation

Under a prior approval rating law, an insurer must:

  1. Obtain regulatory approval of its rates before using them. Correct answer.
  2. Meet a minimum loss ratio in lieu of any filing.
  3. File its rates within 30 days after they take effect.
  4. Use only rates promulgated by the state insurance department.

Explanation

Prior approval requires the insurer to submit rates and receive the regulator's approval before the rates may be used. File-and-use and use-and-file are less restrictive alternatives.

Question 15Insurance Principles and Regulation

Under a no-fault automobile insurance system, accident victims:

  1. Collect first-party benefits from their own insurer for economic losses regardless of fault, with tort rights restricted. Correct answer.
  2. Recover only from a state-administered accident fund.
  3. Must sue the at-fault driver to recover economic losses.
  4. Cannot recover benefits from any source.

Explanation

No-fault laws require each insured's own insurer to pay specified economic losses promptly without a fault determination. In exchange, the right to sue for pain and suffering is restricted by thresholds.

Question 16Insurance Principles and Regulation

The exclusive remedy provision of workers compensation law provides that:

  1. The employee must first sue a coworker before filing a claim.
  2. Statutory benefits are the employee's sole remedy against the employer for work-related injury, absent intentional misconduct. Correct answer.
  3. The employee may sue the employer for any amount of damages.
  4. The employer may deny all claims arising from workplace injuries.

Explanation

Workers compensation is a no-fault statutory bargain: the employee gives up tort claims against the employer and receives scheduled benefits. Employers remain exposed to suits for intentional acts and, in some states, gross misconduct.

Question 17Insurance Principles and Regulation

A claims-made liability policy responds to claims that are:

  1. First made against the insured during the policy period, subject to any retroactive date. Correct answer.
  2. Limited to property damage losses.
  3. Reported only after the policy has expired.
  4. Occurring during the policy period regardless of when reported.

Explanation

Claims-made coverage is triggered when a claim is first made or reported during the policy period, and a retroactive date limits how far back the covered acts may have occurred. Occurrence policies, by contrast, are triggered by the date of injury or damage.

Question 18Insurance Principles and Regulation

Compared with a preferred provider organization (PPO), a health maintenance organization (HMO) typically:

  1. Offers a broader network and no requirement for referrals.
  2. Requires members to use network providers and often to obtain a primary care referral. Correct answer.
  3. Charges the highest deductibles of any managed care plan.
  4. Reimburses in-network and out-of-network care at the same rate.

Explanation

HMOs generally use closed or narrow networks with a primary care gatekeeper and emphasize preventive care. PPOs offer broader networks and allow out-of-network care at a higher cost share without referrals.

Question 19Insurance Principles and Regulation

A pure captive insurance company is one that:

  1. Is operated by the state as a residual market mechanism.
  2. Writes coverage for the general public on an admitted basis.
  3. Is owned by a single parent organization and finances that organization's risks. Correct answer.
  4. Is owned collectively by several unrelated insureds.

Explanation

A pure captive serves only its parent and affiliated entities, retaining and financing their risk. Group captives, by contrast, are owned by multiple unrelated organizations.

Question 20Insurance Principles and Regulation

In the NAIC risk-based capital formula for property-casualty insurers, the R4 component primarily measures:

  1. Asset risk arising from the investment portfolio.
  2. Risk from off-balance-sheet items and affiliates.
  3. Underwriting risk associated with loss and loss adjustment expense reserves and net written premiums. Correct answer.
  4. Credit risk from reinsurance recoverables and agents' balances.

Explanation

R4 captures underwriting risk, reflecting the uncertainty in loss reserves and in the volume and mix of business written. Asset risk is addressed in the R1 and R2 components, credit risk in R3.

Question 21Insurance Principles and Regulation

An insurer's IRIS premiums-to-surplus ratio is unusually high, at roughly 4.0. This most likely signals:

  1. An excess of highly liquid assets over liabilities.
  2. An unusually low expense ratio relative to peers.
  3. Potential strain on surplus from writing a large volume of business relative to capacity. Correct answer.
  4. Significant understatement of loss reserves.

Explanation

Premiums to surplus is a capacity measure; high values indicate that the company is writing a large premium volume relative to its capital, leaving less cushion for adverse results. Regulators treat unusually high or low values as ratio-range exceptions worth investigating.

Question 22Insurance Principles and Regulation

Under statutory accounting principles, nonadmitted assets such as certain furniture and equipment are:

  1. Amortized over a 30-year period as an admitted asset.
  2. Reported as admitted assets after applying a capital charge.
  3. Excluded from admitted assets and charged directly against surplus. Correct answer.
  4. Included in admitted assets at fair market value.

Explanation

Statutory accounting emphasizes conservatism and liquidity, so assets deemed unavailable to pay claims are nonadmitted and reduce surplus rather than being recognized on the balance sheet. GAAP, by contrast, would generally report such assets.

Question 23Insurance Principles and Regulation

An insurer learns of a material misrepresentation in an application but continues to accept premiums without rescinding the policy. A court is most likely to hold that the insurer:

  1. Is barred from collecting premium taxes on the policy.
  2. Is automatically placed into rehabilitation by the regulator.
  3. Must refund only the unearned premium and may still deny all claims.
  4. Has waived its right to rescind and may be estopped from denying coverage. Correct answer.

Explanation

Waiver is the voluntary relinquishment of a known right, and estoppel prevents a party from asserting a right after inducing reliance. Continuing to accept premiums after learning of the misrepresentation can waive rescission and estop the insurer from denying coverage.

Question 24Insurance Principles and Regulation

A liability reinsurance treaty provides coverage of 5,000,000 excess of 1,000,000 per occurrence. A single occurrence produces 1,600,000 of covered loss. How much does the reinsurer pay?

  1. 1,600,000
  2. 600,000 Correct answer.
  3. 0
  4. 800,000

Explanation

The ceding insurer retains the first 1,000,000, and the reinsurer pays the portion above that retention up to the treaty limit. Here 1,600,000 minus 1,000,000 equals 600,000, which is within the 5,000,000 limit.

Question 25Insurance Principles and Regulation

After paying an insured's covered property loss caused by a negligent third party, the insurer's subrogation right allows it to:

  1. Collect the same loss amount a second time from the insured.
  2. Seek recovery from the third party, up to the amount it paid. Correct answer.
  3. Deny the claim retroactively once the third party is identified.
  4. Cancel the policy back to its inception date.

Explanation

Subrogation lets the insurer stand in the insured's shoes to pursue the responsible party after paying the claim, preventing double recovery. Any recovery beyond the insurer's payment belongs to the insured.

Question 26Insurance Principles and Regulation

The principle of indemnity in property insurance is intended to:

  1. Guarantee that the insured profits whenever a covered loss occurs
  2. Allow the insured to collect more than the actual loss when premiums are high
  3. Restore the insured to the same financial position as before the loss Correct answer.
  4. Provide a fixed benefit that is unrelated to the amount of the loss

Explanation

Indemnity seeks to make the insured whole after a loss, not better off. Payment is limited to the actual financial loss, subject to policy terms and limits.

Question 27Insurance Principles and Regulation

An owner insures a building, then sells it but keeps the policy. A fire damages the building after the sale. The insurer may deny the claim primarily because:

  1. Property policies automatically terminate when ownership changes
  2. The buyer did not sign the original insurance application
  3. The original owner lacked insurable interest at the time of loss Correct answer.
  4. The policy was not assigned to the buyer with insurer consent

Explanation

For property insurance, insurable interest must exist at the time of loss. A former owner who has sold the building no longer bears the financial loss from damage to it.

Question 28Insurance Principles and Regulation

A binder issued by an insurer or producer serves to:

  1. Provide temporary evidence of coverage until the policy is issued Correct answer.
  2. Certify that the insurer meets state solvency requirements
  3. List the standard exclusions that apply to a policy
  4. Permanently replace the policy once the first premium is paid

Explanation

A binder is temporary evidence that coverage is in force pending issuance of the formal policy. It is not the permanent policy itself.

Question 29Insurance Principles and Regulation

An insurer is incorporated in State A and is authorized to transact insurance in State B. From the perspective of State B, the insurer is classified as:

  1. A reciprocal insurer
  2. A foreign insurer Correct answer.
  3. A domestic insurer
  4. An alien insurer

Explanation

In a given state, a domestic insurer is incorporated in that state, a foreign insurer is incorporated in another state, and an alien insurer is incorporated outside the United States.

Question 30Insurance Principles and Regulation

A mutual insurance company is owned by:

  1. Its shareholders
  2. The state insurance department
  3. Its reinsurers
  4. Its policyholders Correct answer.

Explanation

A mutual insurer is owned by its policyholders, who may receive dividends or participate in governance. A stock insurer is owned by shareholders.

Question 31Insurance Principles and Regulation

A reciprocal insurance exchange is best described as:

  1. A fraternal organization that limits membership to a particular religion
  2. An unincorporated group of subscribers who exchange insurance contracts through an attorney-in-fact Correct answer.
  3. A corporation owned by shareholders that issues nonparticipating policies
  4. A government agency that provides residual market property coverage

Explanation

A reciprocal exchange is an unincorporated group of subscribers who exchange indemnity contracts through an attorney-in-fact. It is not a stock corporation or a government residual market plan.

Question 32Insurance Principles and Regulation

Under the federal Liability Risk Retention Act, a risk retention group must:

  1. Purchase all of its coverage from a surplus lines insurer
  2. Write only property coverage for its member owners
  3. Be licensed separately in every state in which it writes liability coverage
  4. Be owned by the insureds it covers and chartered in at least one state Correct answer.

Explanation

A risk retention group must be owned by its insureds and be chartered in at least one state. It may then register in other states without obtaining a full license in each one.

Question 33Insurance Principles and Regulation

In facultative reinsurance, the reinsurer:

  1. Must accept all risks ceded under a treaty
  2. Shares proportionally in all risks written by the ceding insurer
  3. Has the option to accept or decline each risk offered Correct answer.
  4. Receives no premium for the risks it assumes

Explanation

Facultative reinsurance is negotiated risk by risk, so the reinsurer may accept or decline each risk. Treaty reinsurance, by contrast, generally obligates the reinsurer to accept risks within its terms.

Question 34Insurance Principles and Regulation

Under a surplus share reinsurance treaty, the ceding insurer generally:

  1. Cedes a fixed percentage of every risk regardless of size
  2. Transfers all risk above a per-occurrence retention on a nonproportional basis
  3. Cedes only losses above an annual aggregate stop-loss point
  4. Retains a fixed dollar amount per risk and cedes a proportional share of the excess Correct answer.

Explanation

Surplus share reinsurance is proportional, but the ceded percentage varies with the size of the risk. The ceding insurer retains a fixed dollar line and cedes a share of the amount above that line.

Question 35Insurance Principles and Regulation

Stop-loss reinsurance is designed to protect the ceding insurer against:

  1. Adverse loss development on expired policies
  2. Aggregate losses exceeding a specified amount over a period Correct answer.
  3. Losses arising from a single catastrophic event
  4. Individual claims exceeding a specified retention

Explanation

Stop-loss reinsurance, often called aggregate excess of loss, responds when total losses over a period exceed a specified threshold. It protects against accumulation of many losses rather than one large claim.

Question 36Insurance Principles and Regulation

A ceding commission paid by a reinsurer to a ceding insurer is intended primarily to:

  1. Provide a profit-sharing return to the reinsurer's shareholders
  2. Pay state premium taxes on the reinsurance transaction
  3. Compensate the reinsurer for assuming underwriting risk
  4. Reimburse the ceding insurer for acquisition and administrative expenses Correct answer.

Explanation

A ceding commission reimburses the ceding insurer for expenses it incurred in acquiring and administering the business being reinsured. It helps align the economics of the reinsurance arrangement.

Question 37Insurance Principles and Regulation

After a life insurance policy has been in force for the contestable period, the incontestability clause generally prevents the insurer from:

  1. Requiring proof of death before paying a claim
  2. Applying the suicide exclusion during the first two policy years
  3. Rescinding the policy because of misstatements in the application Correct answer.
  4. Denying a claim because the insured stopped paying premiums

Explanation

The incontestability clause generally bars the insurer from contesting the policy after a specified period, often two years, based on misrepresentations in the application. Nonpayment and the suicide clause are treated separately.

Question 38Insurance Principles and Regulation

A grace period in a life insurance policy allows the policyowner to:

  1. Pay an overdue premium while coverage remains in force Correct answer.
  2. Skip all future premium payments without losing coverage
  3. Cancel the policy and receive a full refund of all premiums
  4. Delay the policy's effective date by up to one year

Explanation

The grace period is a short time after the premium due date during which the policy remains in force. If a claim occurs, the insurer may deduct the overdue premium from the benefit.

Question 39Insurance Principles and Regulation

If a whole life policy lapses after it has accumulated cash value, the nonforfeiture options typically include:

  1. Automatic conversion to a term policy with no cash value
  2. Reduced paid-up insurance, extended term insurance, or cash surrender Correct answer.
  3. A transfer of the policy to the insurer's shareholders
  4. A refund of all premiums paid without interest

Explanation

Nonforfeiture options preserve the policyowner's accumulated value when a cash-value policy lapses. Common options are cash surrender, reduced paid-up insurance, and extended term insurance.

Question 40Insurance Principles and Regulation

A property policy has an 80% coinsurance clause and a building valued at $500,000. The insured carries $300,000 of coverage. If a $100,000 covered loss occurs, the insurer will pay approximately:

  1. $60,000, because the insured is underinsured by 40%
  2. $100,000, because the loss is below the policy limit
  3. $80,000, because the coinsurance percentage applies directly to the loss
  4. $75,000, after applying the coinsurance penalty Correct answer.

Explanation

The required insurance is 80% of $500,000, or $400,000. The payment is $100,000 multiplied by the ratio of carried insurance to required insurance, 300,000/400,000, which equals $75,000, subject to the policy limit.

Question 41Insurance Principles and Regulation

A liability policy has a $50,000 aggregate deductible. The insured incurs three covered losses of $20,000, $30,000, and $40,000 during the policy period. Ignoring other limits, the insurer pays:

  1. $50,000, because the aggregate deductible limits total payments
  2. $70,000, because only the largest loss is subject to the deductible
  3. $40,000, because the insured absorbs the first $50,000 of aggregate losses Correct answer.
  4. $90,000, because the aggregate deductible does not apply to liability losses

Explanation

An aggregate deductible applies cumulatively to all covered losses in the period. Total losses are $90,000, so after the insured absorbs the first $50,000, the insurer pays $40,000.

Question 42Insurance Principles and Regulation

Two property policies cover the same loss on a pro rata basis. Policy A has a $100,000 limit and Policy B has a $300,000 limit. For a $40,000 covered loss, Policy A pays:

  1. $30,000
  2. $10,000 Correct answer.
  3. $40,000
  4. $20,000

Explanation

Under pro rata other insurance, each policy pays in proportion to its limit. Policy A's share is 100,000/(100,000+300,000), or 25%, so it pays 25% of $40,000, which is $10,000.

Question 43Insurance Principles and Regulation

A proof of loss provision in an insurance policy generally requires the insured to:

  1. Obtain a court judgment establishing the insurer's liability
  2. Prove that the insurer acted in bad faith before filing a claim
  3. Submit a written request before the policy is issued
  4. Provide a sworn statement documenting the amount and circumstances of the loss Correct answer.

Explanation

A proof of loss is a formal statement, often sworn, that documents the loss and supports the claim. Failure to provide it when required can prejudice the insured's recovery.

Question 44Insurance Principles and Regulation

The doctrine of contra proferentem provides that ambiguous policy language is construed:

  1. According to the strict literal meaning of the words
  2. In favor of the state insurance regulator
  3. Against the party that drafted the policy Correct answer.
  4. In favor of the insurer that drafted the policy

Explanation

Contra proferentem means ambiguity is construed against the drafter, which is usually the insurer. This is a consumer-protective rule of contract interpretation.

Question 45Insurance Principles and Regulation

State rate regulation generally requires that insurance rates be:

  1. Set by the state insurance department for every insurer
  2. Identical among all insurers writing the same line
  3. Adequate, not excessive, and not unfairly discriminatory Correct answer.
  4. High enough to guarantee a profit in every year

Explanation

The standard regulatory test is that rates must be adequate for solvency, not excessive for consumers, and not unfairly discriminatory among similar risks. Competition and individual insurer judgment are generally allowed within that framework.

Question 46Insurance Principles and Regulation

Under a file-and-use rating law, an insurer may:

  1. Change rates without any filing or notice to the regulator
  2. Use a new rate immediately after filing it with the regulator Correct answer.
  3. Use a new rate only after the regulator formally approves it
  4. Use a new rate only after a public hearing is held

Explanation

File-and-use allows an insurer to file a rate and begin using it without waiting for prior approval. The regulator may review the filing afterward and take action if it does not comply with the law.

Question 47Insurance Principles and Regulation

A FAIR plan is a residual market mechanism that typically provides:

  1. Liability coverage for high-risk drivers
  2. Reinsurance for insurers writing workers compensation
  3. Health insurance for employees of small businesses
  4. Basic property insurance to owners unable to obtain it in the voluntary market Correct answer.

Explanation

FAIR plans are residual market property insurance mechanisms that make basic coverage available when the voluntary market will not provide it. They are not auto, workers compensation, or health programs.

Question 48Insurance Principles and Regulation

In a surety bond, the surety guarantees that:

  1. The creditor will indemnify the debtor against default
  2. The principal will perform an obligation owed to the obligee Correct answer.
  3. The insurer will pay dividends to policyholders
  4. The obligee will reimburse the principal for covered losses

Explanation

A surety bond involves three parties: the surety guarantees the principal's performance or obligation to the obligee. If the principal defaults, the surety may be liable.

Question 49Insurance Principles and Regulation

Business income coverage is designed to indemnify a business for:

  1. Increased costs of borrowing after a loss
  2. Punitive damages awarded against the business
  3. Lost profits and continuing expenses during the restoration period Correct answer.
  4. The full market value of damaged real property

Explanation

Business income coverage replaces earnings lost because of a covered property interruption. It typically covers lost profits and continuing normal expenses during the period of restoration.

Question 50Insurance Principles and Regulation

Uninsured motorists coverage generally pays an insured for:

  1. Bodily injury caused by a negligent driver who has no liability insurance Correct answer.
  2. Damage to the insured's vehicle caused by the insured's own negligence
  3. Property damage caused by a hit-and-run driver only
  4. Medical expenses of the other driver regardless of fault

Explanation

Uninsured motorists coverage responds when an insured is injured by a negligent driver who lacks liability insurance. It is not a general collision or medical payments coverage.