Understanding Auto Insurance Policies

After a minor car accident, Benjamin and another driver both suffer injuries. Regardless of who caused the accident, what is the purpose of no-fault insurance in this situation?

• To provide coverage for vehicle theft

• To reimburse insured drivers for medical expenses and loss of wages regardless of fault

• To cover damages to the insured's vehicle

• To eliminate the need for insurance

Answer explanation

The purpose of no-fault insurance is to reimburse insured drivers for medical expenses and loss of wages regardless of who caused the accident, ensuring quick access to benefits without the need to establish fault.

David is reviewing his auto insurance policy and wants to understand what is excluded from Part C – Uninsured Motorists coverage. Which of the following situations would not be covered?

• Bodily injury sustained by David while walking

• Bodily injury sustained by David while occupying a vehicle owned by a friend

• Bodily injury sustained by David while driving a rental car

• Bodily injury sustained by David while occupying a vehicle owned by David but not insured for uninsured motorists coverage

Answer explanation

Bodily injury sustained by David while occupying a vehicle owned by David but not insured for uninsured motorists coverage is excluded, as coverage only applies to insured vehicles.

Grace has a Personal Auto Policy. Who is considered an insured under her policy?

• The named insured and family members using any auto

• Anyone driving the insured's car

• Only the named insured

• Only the named insured and their spouse

Answer explanation

Under Grace's Personal Auto Policy, the named insured and family members using any auto are considered insured. This includes family members driving any vehicle, not just the one specifically listed.

Aria's 18-year-old son borrows their neighbor's car and gets into an accident. What is the insurer's obligation in this situation?

• The insurer is not obligated to cover the accident

• The insurer covers the accident under the insured's policy

• The insurer covers the accident only if the neighbor's insurance is insufficient

• The insurer covers the accident only if the son has a license

Answer explanation

The insurer covers the accident under the insured's policy because the car was borrowed with permission. The policy typically extends coverage to permissive users, including Aria's son.

Charlotte is involved in a car accident and settles the losses with the other party without informing or getting consent from her insurer. What happens in this situation?

• The settlement is void

• The insurer’s right to subrogate against the insured driver is prejudiced

• The insurer will pay the full amount

• The insured must pay a penalty

Answer explanation

By settling without informing her insurer, Charlotte prejudices the insurer's right to subrogate, meaning the insurer cannot recover costs from the at-fault party. This affects their ability to seek reimbursement.

Kai and an insurance company have a disagreement under Part C of their policy. What is the role of arbitration in this situation?

• To decide the insurer's liability

• To negotiate policy terms

• To resolve disagreements about entitlement to coverage or amount of damages

• To determine the premium amount

Answer explanation

Arbitration serves to resolve disagreements about entitlement to coverage or the amount of damages, making it the appropriate mechanism for Kai and the insurance company to settle their dispute.

Liam has a history of traffic violations and accidents, making it difficult for him to find an insurance company willing to provide him with auto coverage. What type of insurance plan is designed to help drivers like Liam obtain the required auto insurance?

• To cover high-value vehicles

• To provide insurance to drivers with excellent records

• To provide auto insurance to drivers unable to obtain it due to bad driving records

• To offer discounts to safe drivers

Answer explanation

The correct choice is designed specifically for drivers like Liam, who struggle to find auto insurance due to poor driving records. This type of plan helps them obtain the necessary coverage despite their history.

Nora recently filed a claim under Part C of her insurance policy. Which of the following is something the insurer is not allowed to do in this situation?

• Pay for damages to the insured's vehicle

• Make duplicate payments for losses paid under more than one part of the policy

• Provide coverage for theft

• Cover medical expenses

Answer explanation

The insurer cannot make duplicate payments for losses covered under multiple parts of the policy, as this would violate the principle of indemnity. Other options, like covering medical expenses or theft, are allowed.

Nora has an auto insurance policy. Under which of the following situations would her policy provide excess coverage?

• When Nora is driving her own vehicle

• When Nora is a passenger in a taxi

• When Nora is driving a rental car

• When Nora is occupying a non-owned vehicle

Answer explanation

Nora's policy provides excess coverage when she occupies a non-owned vehicle, meaning her insurance can cover additional costs beyond the primary insurance of the vehicle owner.

Charlotte is involved in a car accident where the other driver is at fault, but that driver’s insurance isn’t enough to cover all of Charlotte’s medical bills. What does underinsured motorists coverage provide in this situation?

• Coverage for medical expenses regardless of fault

• Coverage for theft of the insured's vehicle

• Coverage for bodily injury when the at-fault driver's insurance is insufficient

• Coverage for damages to the insured's vehicle

Answer explanation

Underinsured motorists coverage provides protection for bodily injury when the at-fault driver's insurance is insufficient to cover medical expenses, making it the correct choice in Charlotte's situation.