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CISR Personal Auto study materials
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CISR Personal Auto practice questions

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Question 1Introduction to the Personal Auto Policy

The ISO Personal Auto Policy provides liability coverage for which set of vehicles?

  1. Any vehicle the named insured borrows, rents, or leases, regardless of size or business use
  2. Every motor vehicle owned by the named insured, including commercial tractors and dump trucks
  3. Private passenger autos, pickups, vans, and SUVs that meet the policy's weight and use tests Correct answer.
  4. Only vehicles titled in the name of a lending institution

Explanation

The PAP is written for private passenger autos and for pickups, vans, and sport utility vehicles that fall within stated gross vehicle weight limits and are not used in a prohibited business manner. Heavy commercial equipment and vehicles used in certain business operations fall outside the eligibility rules and require a commercial auto form.

Question 2Introduction to the Personal Auto Policy

Under the PAP, the term 'you' and 'your' refers to which party?

  1. The named insured shown in the Declarations and that person's spouse if a resident of the same household Correct answer.
  2. The insurance producer who sold the policy
  3. Any licensed driver operating the covered auto with permission
  4. The lienholder listed on the Declarations page

Explanation

The PAP definitions section gives 'you' and 'your' a narrow meaning: the named insured and, if a resident of the same household, the spouse. Other drivers are addressed through separate definitions such as 'family member' and 'insured,' so they are not 'you.'

Question 3Introduction to the Personal Auto Policy

Which document in a PAP package personalizes the contract by listing the insured's name, address, policy period, covered autos, and limits?

  1. The exclusions section
  2. The amendatory endorsements
  3. The definitions section
  4. The Declarations page Correct answer.

Explanation

The Declarations page is the individualized summary of the contract; it identifies the named insured, the policy period, the described autos, and the liability and physical damage limits selected. The remaining forms are standardized language that applies to all insureds.

Question 4Introduction to the Personal Auto Policy

The PAP is organized into Parts A through D plus Parts E and F. Which coverage is provided by Part D?

  1. Liability coverage
  2. Uninsured motorists coverage
  3. Coverage for damage to your auto Correct answer.
  4. Medical payments coverage

Explanation

Part D is Coverage for Damage to Your Auto, which includes both collision and other than collision (comprehensive) coverage for the described auto. Liability sits in Part A, medical payments in Part B, and uninsured motorists in Part C.

Question 5Introduction to the Personal Auto Policy

Under the PAP, what does the term 'family member' mean?

  1. A person who shares the vehicle but has no family relationship to the named insured
  2. A person related to the named insured by blood, marriage, or adoption who is a resident of the named insured's household Correct answer.
  3. A domestic employee who is furnished a company car by the named insured
  4. Any relative who lives in a different state but drives the covered auto on holidays

Explanation

The definition combines two tests: a relationship to the named insured by blood, marriage, or adoption, and residency in the same household. Both elements must be met for the person to be a family member.

Question 6Introduction to the Personal Auto Policy

What is the purpose of the 'out of state' provision in the PAP?

  1. It cancels the policy when the insured takes a job in another state
  2. It automatically conforms the policy to the compulsory auto insurance laws of another state where the covered auto is used Correct answer.
  3. It increases liability limits to the highest limits available in any state the insured visits
  4. It extends physical damage coverage to rental cars worldwide without any deductible

Explanation

The out of state provision broadens coverage when a covered auto is used in another state, automatically meeting that state's compulsory insurance requirements if the policy limits fall short. It applies to financial responsibility and compulsory laws, not to physical damage deductibles or worldwide rentals.

Question 7Introduction to the Personal Auto Policy

A named insured's son lives at college in another city during the school year but returns home on breaks. Under the PAP, is he a resident of the named insured's household?

  1. No, because students away at school are excluded from all PAP coverage
  2. Yes, but only if the auto is titled in the student's name
  3. No, because residency requires physical presence every night of the policy period
  4. Yes, because a student away at school is generally treated as a resident of the named insured's household Correct answer.

Explanation

The PAP definition of 'family member' and household residency is applied so that an unmarried student away at school remains a resident of the named insured's household. Physical presence every night is not required, and the titling of the vehicle does not control residency.

Question 8Introduction to the Personal Auto Policy

An insured purchases a replacement vehicle and does not notify the insurer. What does the PAP provide for the newly acquired auto?

  1. Coverage for one year under the same terms as the auto it replaced
  2. Coverage only if the insured pays an additional premium before taking delivery
  3. Automatic coverage for a limited period, generally until the end of the fourteenth day after acquisition, for a replacement auto Correct answer.
  4. No coverage under any circumstances until the auto is added by endorsement

Explanation

The newly acquired auto provision grants automatic coverage for a short window, commonly fourteen days, so the insured is not uninsured immediately after a purchase. After that period, coverage requires the auto to be reported and added to the policy.

Question 9Introduction to the Personal Auto Policy

Which best describes the role of an amendatory endorsement in the PAP?

  1. It replaces the Declarations page with a new schedule of limits
  2. It serves as a temporary binder until the policy is issued
  3. It is an informational notice that has no effect on coverage
  4. It alters, adds to, or deletes provisions of the base policy form and takes precedence over conflicting policy language Correct answer.

Explanation

Endorsements are used to tailor the standard PAP, and their terms control over conflicting language in the base form. They may broaden or restrict coverage, and they are contractual rather than merely informational.

Question 10Introduction to the Personal Auto Policy

The PAP's 'your covered auto' definition includes which of the following?

  1. A vehicle the named insured borrows from a neighbor for personal errands
  2. Any vehicle the named insured drives for an employer in the course of business
  3. A vehicle rented for use in a delivery business
  4. A vehicle the named insured acquires during the policy period as a replacement or addition, subject to the automatic coverage rules Correct answer.

Explanation

'Your covered auto' includes the autos shown in the Declarations, newly acquired autos within the automatic coverage rules, and trailers owned by the insured. Borrowed or business-use vehicles are handled through separate liability provisions and exclusions.

Question 11Introduction to the Personal Auto Policy

A policyholder's child is driving the family car on a personal errand and causes an accident. Under the PAP, the child is best described as which of the following?

  1. An insured, because a family member using a covered auto is within the definition of insured Correct answer.
  2. A lienholder, because the child has an ownership interest in the household vehicle
  3. An excluded driver, because only the named insured may operate the auto
  4. A named insured, because family members are automatically named on the Declarations

Explanation

The PAP definition of 'insured' extends to family members using a covered auto, so the child qualifies for liability and medical payments coverage. Being an insured does not make the child a named insured on the Declarations.

Question 12Introduction to the Personal Auto Policy

Which statement correctly describes how the PAP handles a trailer?

  1. Trailers are never covered under a personal auto policy
  2. Trailers are covered only when they are attached to a commercial vehicle
  3. Trailers are covered only if separately listed on a commercial auto policy
  4. A trailer owned by the named insured is included as a covered auto, and liability extends to a trailer used with a covered auto Correct answer.

Explanation

The PAP treats an owned trailer as a covered auto and extends liability coverage to a trailer being used with a covered auto. Trailers are not limited to commercial use or to separate commercial policies.

Question 13Introduction to the Personal Auto Policy

The PAP's 'supplementary payments' provision covers which of the following in addition to the liability limit?

  1. The insured's lost wages while attending a trial
  2. The cost of repairing the insured's own vehicle after a collision
  3. Punitive damages awarded against the insured
  4. Defense costs and certain expenses such as premiums for bonds and post-judgment interest Correct answer.

Explanation

Supplementary payments are paid in addition to the liability limit and include defense costs and items such as bond premiums and post-judgment interest. They do not extend to the insured's lost wages, punitive damages, or the insured's own vehicle repairs.

Question 14Introduction to the Personal Auto Policy

An insured is driving a rented moving truck that exceeds the PAP's weight limit for covered autos. How does the PAP respond to liability arising from this use?

  1. The PAP covers the loss because the insured was operating the vehicle personally
  2. The PAP covers the loss because all rental vehicles are covered autos
  3. The PAP generally does not cover the vehicle because it falls outside the definition of a covered auto Correct answer.
  4. The PAP covers the loss only if the rental company's policy is exhausted first

Explanation

Eligibility under the PAP depends on vehicle type and weight, so a truck above the stated limit is not a covered auto. Personal use of the vehicle does not override the eligibility rule, and the PAP does not act as excess coverage for such a vehicle.

Question 15Introduction to the Personal Auto Policy

What is the function of the 'Changes' condition in the PAP?

  1. It allows the insured to increase limits by phone at any time without documentation
  2. It permits the insurer to change coverage retroactively without notice
  3. It requires that policy changes be made in writing and with the insurer's consent, and states that the policy terms cannot be waived or changed orally Correct answer.
  4. It requires the insured to renew the policy every six months

Explanation

The Changes condition makes the written policy, including endorsements, the complete agreement and requires written consent for modifications. Oral statements by agents or insureds cannot alter the contract, which protects both parties.

Question 16Introduction to the Personal Auto Policy

The PAP's 'Duties After an Accident or Loss' condition requires the insured to do which of the following?

  1. Wait until a lawsuit is filed before contacting the insurer
  2. Obtain three independent repair estimates before reporting any claim
  3. Pay the claim directly to the injured party before notifying the insurer
  4. Promptly notify the insurer, cooperate in the investigation, and submit to examination under oath if required Correct answer.

Explanation

The duties condition obligates the insured to give prompt notice, cooperate with the insurer, and provide records or submit to examination under oath when required. These duties preserve the insurer's ability to investigate and defend claims.

Question 17Introduction to the Personal Auto Policy

Which statement best captures the relationship between Parts A, B, C, and D of the PAP?

  1. Each part is a separate coverage with its own insuring agreement, exclusions, and limits, and a coverage must be purchased to apply Correct answer.
  2. Part A automatically includes the coverages in Parts B, C, and D
  3. All four parts are automatically included at the same limits whenever a PAP is issued
  4. Parts B, C, and D are optional only for commercial auto policies

Explanation

The PAP is a package of distinct coverages, each with its own insuring agreement, exclusions, and limits shown in the Declarations. A coverage responds only if it was purchased and its terms are satisfied.

Question 18Introduction to the Personal Auto Policy

An insured asks whether a PAP can cover a vehicle used to deliver pizzas. What is the most accurate answer?

  1. Delivery use is always covered because the vehicle is a private passenger auto
  2. Delivery use is covered because the PAP has no business-use exclusions
  3. Delivery use is covered only if the insured pays a higher deductible
  4. Delivery use may fall within a business-use exclusion, so the insured should confirm eligibility and consider a commercial policy Correct answer.

Explanation

The PAP excludes liability and physical damage coverage for vehicles used to carry persons or property for a fee, with limited exceptions. Pizza delivery is a business use that commonly triggers the exclusion, so a commercial policy may be needed.

Question 19Introduction to the Personal Auto Policy

A named insured's spouse lives in the same household and owns a vehicle that is not listed on the PAP. How does the PAP treat that vehicle for liability purposes?

  1. It is never covered because only vehicles listed on the Declarations are covered autos
  2. It is covered only for physical damage, not liability
  3. It may be treated as a covered auto because a resident spouse's owned auto falls within the definition of 'your covered auto' Correct answer.
  4. It is covered only if the spouse purchases a separate PAP

Explanation

The definition of 'your covered auto' extends to autos owned by the named insured or a family member, which captures a resident spouse's vehicle. The Declarations are not the sole source of covered autos, though insureds are expected to report all owned vehicles.

Question 20Introduction to the Personal Auto Policy

An insured's adult child lives in the household but is not listed on the policy. The child regularly drives a covered auto. What is the most significant underwriting concern for the insurer?

  1. A household resident operating the covered auto is an insured, so the insurer's rating and premium may be based on incomplete information Correct answer.
  2. The child must be a named insured to have any coverage
  3. The insurer can deny a claim solely because the child was not listed as a driver
  4. The child's operation voids all coverage because unlisted drivers are never insured

Explanation

Household residents who operate covered autos are insureds under the PAP, so their driving records affect the risk the insurer intended to price. Failure to disclose a regular operator can lead to premium adjustments or other remedies, but it does not automatically void coverage or require named-insured status.

Question 21Introduction to the Personal Auto Policy

An insured is involved in an accident while driving a friend's car with permission. The friend has no insurance. How does the PAP's liability coverage typically apply?

  1. The PAP provides liability coverage for the insured's use of a non-owned auto, subject to the policy's terms and exclusions Correct answer.
  2. The PAP covers the friend's car only for physical damage
  3. The PAP never covers non-owned autos under any circumstances
  4. The PAP covers the insured only if the friend's car is listed on the Declarations

Explanation

The PAP extends liability coverage to the insured's use of a non-owned auto, including a borrowed vehicle, subject to the policy's exclusions and limits. Physical damage coverage for the borrowed car is generally not provided.

Question 22Introduction to the Personal Auto Policy

An insured owns a pickup truck with a gross vehicle weight rating of 12,000 pounds used solely for personal errands. Is the truck eligible for coverage under the PAP?

  1. No, because pickups above the PAP's weight threshold fall outside the definition of a covered auto Correct answer.
  2. Yes, because all pickups are eligible regardless of weight
  3. Yes, because personal use overrides any weight restriction
  4. No, because pickups are never eligible for personal auto coverage

Explanation

The PAP limits eligibility for pickups and vans by gross vehicle weight rating, so a 12,000-pound truck exceeds the threshold and is not a covered auto. Personal use does not cure the weight problem, and pickups within the limit are eligible.

Question 23Introduction to the Personal Auto Policy

An insured moves to a new address and does not notify the insurer. Which policy provision is most directly relevant to the insurer's ability to reach the insured with notices and claim information?

  1. The policy's address and notice provisions, which rely on the insured keeping the insurer informed of a current mailing address Correct answer.
  2. The newly acquired auto provision
  3. The supplementary payments provision
  4. The out of state provision

Explanation

The PAP conditions require the insured to keep the insurer informed of a current address so notices and claim communications reach the insured. Supplementary payments, out of state, and newly acquired auto provisions address coverage scope, not notice logistics.

Question 24Introduction to the Personal Auto Policy

Which of the following best explains why the PAP is described as a 'package' policy?

  1. It provides only liability coverage and no other parts
  2. It combines several distinct coverages, each with its own insuring agreement, exclusions, and limits, in a single contract Correct answer.
  3. It automatically includes every available endorsement at no extra cost
  4. It bundles homeowners and auto coverage into one form

Explanation

The PAP combines Parts A through D, and the related conditions in Parts E and F, into one contract while preserving separate coverage grants and exclusions. It does not combine homeowners coverage, and endorsements may add cost.

Question 25Introduction to the Personal Auto Policy

The PAP's 'Legal Action Against Us' condition generally provides that an insured may sue the insurer only after which of the following?

  1. The insured has fully complied with all policy terms and the amount of damages has been determined by judgment or written agreement Correct answer.
  2. The insured has filed a police report within twenty-four hours
  3. The insurer has denied the claim in writing within thirty days
  4. The insured has paid the annual premium in full

Explanation

The condition limits suits against the insurer until the insured has complied with the policy and the damages are established by judgment or written agreement. It does not turn on a police report deadline, a denial letter timeline, or full premium payment.

Question 26Introduction to the Personal Auto Policy

The Personal Auto Policy (PAP) is divided into Parts A through D. Which part provides coverage for damage to the insured's own covered auto, such as from a collision or theft?

  1. Part B – Medical Payments Coverage
  2. Part D – Coverage for Damage to Your Auto Correct answer.
  3. Part C – Uninsured Motorists Coverage
  4. Part A – Liability Coverage

Explanation

Part D of the PAP, Coverage for Damage to Your Auto, provides physical damage coverage for the insured vehicle, including collision and other-than-collision losses such as theft, fire, or vandalism. Parts A, B, and C address liability, medical payments, and uninsured motorists, respectively, and do not cover damage to the insured's own vehicle.

Question 27Introduction to the Personal Auto Policy

Under the PAP, which of the following is considered a 'covered auto' without any endorsement?

  1. A vehicle the named insured borrows from a neighbor for a day
  2. A vehicle the named insured leases for a period of 6 months or longer Correct answer.
  3. A vehicle the named insured rents for a weekend trip
  4. A vehicle provided by the named insured's employer for business use

Explanation

The PAP's definition of 'your covered auto' includes any vehicle shown in the Declarations and any private passenger auto, pickup, or van the named insured acquires ownership of or leases under a written lease for at least six months. Short-term rentals and borrowed vehicles are not listed as covered autos, though liability coverage may extend to them as non-owned autos in some circumstances.

Question 28Introduction to the Personal Auto Policy

The PAP's 'Supplementary Payments' provision in Part A covers certain costs in addition to the liability limit. Which of the following is covered under this provision?

  1. The cost of a rental car while the insured's vehicle is being repaired
  2. Premiums paid for appeal bonds in a lawsuit defended by the insurer Correct answer.
  3. The insured's lost wages while attending a trial
  4. Punitive damages awarded against the insured

Explanation

Supplementary Payments under Part A include, among other items, premiums for appeal bonds, bail bonds up to a stated limit, and interest on judgments, all paid in addition to the liability limit. Rental car costs and lost wages are not supplementary payments, and punitive damages are generally not covered.

Question 29Introduction to the Personal Auto Policy

An insured's covered auto is damaged in a collision, and the insured has Part D coverage with a $500 deductible. The repair cost is $3,000. How much will the insurer pay under Part D, assuming no other coverage applies?

  1. $0
  2. $500
  3. $3,000
  4. $2,500 Correct answer.

Explanation

The deductible is subtracted from the covered loss before the insurer pays. With a $500 deductible and $3,000 in repairs, the insurer pays $2,500. The insured is responsible for the $500 deductible.

Question 30Introduction to the Personal Auto Policy

The PAP's 'Other Insurance' condition addresses situations where more than one policy covers the same loss. Which statement best describes how the PAP typically responds when the insured has other collectible insurance?

  1. The PAP shares the loss with other insurers based on a formula, often proportional to limits. Correct answer.
  2. The PAP pays its limit in full, and the other insurer pays nothing.
  3. The PAP pays nothing until all other insurance is exhausted.
  4. The PAP pays only if the insured waives coverage under the other policy.

Explanation

The Other Insurance condition in the PAP generally provides that if other collectible insurance applies to the same loss, the insurer will pay only its proportionate share of the loss, based on the ratio of its limit to the total limits of all applicable insurance. This prevents double recovery and allocates the loss among insurers.

Question 31Introduction to the Personal Auto Policy

An insured is involved in an accident while driving a non-owned auto with the owner's permission. The insured's PAP includes Part A liability coverage. How does the PAP typically respond?

  1. The PAP covers the non-owned auto only if it is listed in the Declarations.
  2. The PAP covers the non-owned auto only if the owner has no insurance.
  3. The PAP excludes coverage for any non-owned auto.
  4. The PAP provides liability coverage for the insured's use of the non-owned auto, subject to the policy terms. Correct answer.

Explanation

The PAP's liability coverage extends to the insured's use of a non-owned auto, provided the use is with permission and within the scope of consent. The coverage is subject to the policy's terms, conditions, and limits, and may be excess over any insurance on the non-owned auto.

Question 32Introduction to the Personal Auto Policy

The PAP's 'Duties After an Accident or Loss' condition requires the insured to perform certain actions. Which of the following is one of those required duties?

  1. Provide prompt notice of the accident to the insurer Correct answer.
  2. Obtain three repair estimates before notifying the insurer
  3. Agree to a settlement without the insurer's consent
  4. Admit fault at the scene to expedite the claim

Explanation

The Duties After an Accident or Loss condition requires the insured to provide prompt notice of the accident, cooperate with the investigation, and submit proof of loss, among other duties. Admitting fault or settling without the insurer's consent may violate the policy's cooperation and voluntary payment provisions.

Question 33Introduction to the Personal Auto Policy

An insured's PAP includes Part C – Uninsured Motorists Coverage. The insured is injured by a hit-and-run driver who cannot be identified. How does Part C typically apply?

  1. Part C pays only if the insured has collision coverage.
  2. Part C covers the insured's bodily injury caused by an uninsured or hit-and-run motorist, subject to the policy terms. Correct answer.
  3. Part C excludes hit-and-run accidents because no uninsured vehicle can be identified.
  4. Part C pays for damage to the insured's vehicle, not bodily injury.

Explanation

Part C – Uninsured Motorists Coverage typically covers bodily injury to the insured caused by an uninsured motorist, including a hit-and-run driver, up to the policy limits. It is not dependent on collision coverage and does not pay for property damage to the insured's vehicle.

Question 34Introduction to the Personal Auto Policy

The PAP's 'Changes' condition addresses how the policy can be modified. Which statement best describes its function?

  1. It automatically updates coverage when the insured acquires a new vehicle.
  2. It requires all changes to be made by written endorsement signed by an authorized representative. Correct answer.
  3. It allows the insured to make oral changes to the policy at any time.
  4. It permits the insurer to change policy terms without notice.

Explanation

The Changes condition states that the policy can be amended only by a written endorsement issued by the insurer and signed by an authorized representative. Oral changes are not binding, and the insurer cannot unilaterally alter terms without proper notice and endorsement.

Question 35Personal Auto Policy Definitions and Liability Coverage

Under the ISO Personal Auto Policy, which of the following is a defined term for a four-wheeled private passenger auto, pickup, or van that the policy lists on the declarations as a covered auto?

  1. Temporary substitute auto
  2. Your covered auto Correct answer.
  3. Newly acquired auto
  4. Non-owned auto

Explanation

The PAP defines "your covered auto" as the vehicles shown on the declarations page, plus any vehicle the policy adds by endorsement. The other listed terms describe autos that receive limited or conditional coverage rather than the primary scheduled vehicles.

Question 36Personal Auto Policy Definitions and Liability Coverage

The PAP liability coverage applies to which of the following persons using "your covered auto"?

  1. Only licensed household members
  2. Only persons listed as drivers on the declarations
  3. Only the named insured
  4. Any person using the auto with a reasonable belief of permission Correct answer.

Explanation

Liability coverage extends to the named insured and resident family members for any auto, and to any person using your covered auto with a reasonable belief they are entitled to do so. The policy does not require that every permissive user be listed on the declarations.

Question 37Personal Auto Policy Definitions and Liability Coverage

The PAP defines "family member" to include which of the following?

  1. A roommate with no family relationship
  2. A person related by blood, marriage, or adoption who resides in the household Correct answer.
  3. A person who shares the household but is unrelated by blood, marriage, or adoption
  4. Any relative who lives in a different state

Explanation

Family member means a person related to the named insured by blood, marriage, or adoption who is a resident of the household. This includes wards and foster children in the standard definition.

Question 38Personal Auto Policy Definitions and Liability Coverage

Which coverage part of the PAP pays damages for which an insured becomes legally responsible because of an auto accident?

  1. Part D, Coverage for Damage to Your Auto
  2. Part B, Medical Payments Coverage
  3. Part C, Uninsured Motorist Coverage
  4. Part A, Liability Coverage Correct answer.

Explanation

Part A, Liability Coverage, pays damages for bodily injury and property damage for which an insured is legally liable due to an auto accident. Parts B, C, and D address medical expenses, uninsured motorists, and physical damage to the vehicle.

Question 39Personal Auto Policy Definitions and Liability Coverage

The PAP liability coverage applies to accidents and losses that occur in which of the following locations?

  1. Worldwide with no geographic limitation
  2. Only the state in which the vehicle is garaged
  3. The United States, its territories and possessions, and Canada Correct answer.
  4. Only the United States and Mexico

Explanation

The PAP provides liability coverage for accidents occurring in the United States, its territories and possessions, and Canada. Mexico is not included in the standard territory, and coverage is not worldwide.

Question 40Personal Auto Policy Definitions and Liability Coverage

Under the PAP, what is the purpose of the supplementary payments provision in Part A?

  1. To pay medical expenses of the insured
  2. To cover damage to the insured's vehicle
  3. To increase the liability limits automatically after a claim
  4. To pay certain costs in addition to the policy limits, such as defense costs and bonds Correct answer.

Explanation

Supplementary payments cover items such as defense costs, bail bonds, and loss of earnings for attending hearings, and they are paid in addition to the liability limits. They do not increase the stated limits or provide first-party medical or physical damage coverage.

Question 41Personal Auto Policy Definitions and Liability Coverage

For liability coverage to apply to a person using a vehicle that is not a covered auto, that person must be which of the following?

  1. Any permissive user of any vehicle
  2. A person listed on the declarations
  3. A person with a valid commercial license
  4. The named insured or a family member Correct answer.

Explanation

For non-owned autos, the PAP extends liability coverage only to the named insured and family members, and only for vehicles not furnished for regular use. Other permissive users are covered only while operating a covered auto.

Question 42Personal Auto Policy Definitions and Liability Coverage

A named insured borrows a friend's car for a two-week vacation and causes an accident. How does the PAP liability coverage respond?

  1. Coverage is denied because the vehicle is not listed on the declarations
  2. Coverage applies only if the friend has no insurance
  3. Coverage applies because the named insured is an insured for a non-owned auto Correct answer.
  4. Coverage applies only for the first seven days

Explanation

The named insured is an insured for a non-owned auto, so the PAP liability coverage applies, though it is excess over any other collectible insurance. The vehicle need not be listed on the declarations for the named insured to be covered.

Question 43Personal Auto Policy Definitions and Liability Coverage

An insured uses a vehicle furnished for regular use by an employer. How does the PAP treat liability coverage for that vehicle?

  1. It is covered as a temporary substitute auto
  2. It is covered as a newly acquired auto
  3. It is covered in full as a non-owned auto
  4. It is excluded for any vehicle furnished for regular use Correct answer.

Explanation

The PAP excludes coverage for vehicles furnished for regular use, whether owned by the insured or available for the insured's regular use. The purpose is to prevent the policy from serving as primary coverage for a vehicle the insured regularly drives.

Question 44Personal Auto Policy Definitions and Liability Coverage

Which of the following is excluded under PAP liability coverage?

  1. Property damage to another driver's vehicle
  2. Bodily injury to a pedestrian struck by the insured
  3. Bodily injury to an employee of the insured arising out of employment Correct answer.
  4. Property damage to a fence the insured's car strikes

Explanation

The PAP excludes liability for bodily injury to an employee of the insured arising out of and in the course of employment, subject to limited exceptions. Injuries to pedestrians and damage to third-party property are core liability exposures the policy is designed to cover.

Question 45Personal Auto Policy Definitions and Liability Coverage

The PAP excludes liability coverage for intentional damage caused by the insured. This exclusion reflects which underlying principle?

  1. Coverage applies only to vehicles listed on the declarations
  2. Coverage applies only to accidents within the garaging state
  3. Coverage applies only to accidental occurrences Correct answer.
  4. Coverage applies only to licensed drivers

Explanation

Liability coverage is intended to respond to accidental occurrences, and intentional acts are excluded. This reflects the principle that insurance should not indemnify deliberate wrongdoing.

Question 46Personal Auto Policy Definitions and Liability Coverage

An insured drives a covered auto into Mexico for a weekend trip. How does the PAP liability coverage respond to an at-fault accident there?

  1. No coverage applies because Mexico is outside the coverage territory Correct answer.
  2. Coverage applies only for property damage
  3. Coverage applies in full because the auto is a covered auto
  4. Coverage applies because the trip is under thirty days

Explanation

The PAP coverage territory is the United States, its territories and possessions, and Canada. Mexico is outside that territory, so liability coverage does not apply to an accident occurring there.

Question 47Personal Auto Policy Definitions and Liability Coverage

The named insured's teenage child, a resident family member, borrows a neighbor's car with permission and causes an accident. What is the PAP result?

  1. Liability coverage applies because a family member is an insured for a non-owned auto Correct answer.
  2. Coverage applies only if the child is listed as a driver
  3. Coverage is denied because the neighbor's car is not listed
  4. Coverage is denied because the child is not the named insured

Explanation

A family member residing in the household is an insured for a non-owned auto, so the PAP liability coverage applies, excess over other collectible insurance. Neither the named insured status nor driver listing is required.

Question 48Personal Auto Policy Definitions and Liability Coverage

Which of the following best describes the PAP liability coverage limit structure?

  1. Separate limits for bodily injury per person, bodily injury per accident, and property damage per accident Correct answer.
  2. A limit that applies only to bodily injury
  3. A limit that increases automatically with inflation
  4. A single combined limit for all damages

Explanation

The PAP typically uses split limits: a per-person bodily injury limit, a per-accident bodily injury limit, and a per-accident property damage limit. Some policies use a combined single limit, but the standard structure is split limits.

Question 49Personal Auto Policy Definitions and Liability Coverage

An insured is sued after an at-fault accident, and the insurer provides a defense. Which statement best describes the insurer's duty under Part A?

  1. The insurer pays defense costs only after the liability limits are exhausted
  2. The insurer defends the insured and pays defense costs in addition to the liability limits Correct answer.
  3. The insurer defends only if the insured requests it in writing
  4. The insurer may decline to defend if the claim is small

Explanation

Under Part A, the insurer has both a duty to pay damages and a duty to defend, and defense costs are supplementary payments outside the liability limits. The duty to defend continues until the limits are exhausted by payment of judgments or settlements.

Question 50Personal Auto Policy Definitions and Liability Coverage

The PAP excludes liability coverage for which of the following uses of a covered auto?

  1. Driving on a vacation
  2. Using the auto to carry persons or property for a fee Correct answer.
  3. Driving a neighbor to the store as a favor
  4. Driving to and from work

Explanation

The PAP excludes liability coverage when the covered auto is used to carry persons or property for a fee, which is a public livery exposure. Commuting, vacations, and occasional favors without payment are ordinary personal use.