chapter ten - commercial auto coverage

Question 1

The deregulation of the trucking industry was accomplished through which 1980 regulation?

Motor Carrier Act

Trailer Interchange Act

Motor Carrier Public Liability Act

Trucking Reform Act

Answer 1

Motor Carrier Act.

This regulation requires certain vehicles carry minimum liability limits ranging from $750,000 to $5,000,000, depending on the type of merchandise transported

Question 2

Section II (Liability) of the Garage Coverage Form covers which of the following?

Injuries covered by Workers’ Compensation

Injuries to an employee that are caused by a fellow employee

Property in the care and custody of the insured

Property damage for which the insured is legally responsible

Answer 2

Property damage for which the insured is legally responsible.

Question 2

Section II (Liability) of the Garage Coverage Form covers which of the following?

Injuries covered by Workers’ Compensation

Injuries to an employee that are caused by a fellow employee

Property in the care and custody of the insured

Property damage for which the insured is legally responsible

Answer 2

Property damage for which the insured is legally responsible.

Question 3

How is lost or damaged property valued under the BAP?

Lesser of the ACV or the cost to repair or replace

Greater of the cost to repair and the replacement cost

Lesser of the replacement cost and the ACV

Greater of the ACV or the cost to repair or replace with like kind

Answer 3

Lesser of the ACV or the cost to repair or replace.

The most the insurer will pay for damaged or stolen property in any one accident is the lesser of the ACV or the cost of repairing or replacing with property of like kind and quality.

Question 4

Which of the following is designed for a firm that transports goods of others, rather than its own goods?

Truckers Coverage Form

Motor Carrier Coverage Form

Business Auto Form

Garage Form

Answer 4

Truckers Coverage Form

A Truckers Coverage Form is designed for common and contract carriers hauling the goods of others.

Question 5

Section II of the Garage Coverage Form does not cover:

Premise and operations liability

Products liability

Damage to the customer’s car in the insured’s care

Completed operations liability

Answer 5

Damage to the customer’s car in the insured’s care.

Section II (Liability) Coverage does not cover vehicles in the insured’s care, custody or control. Section III (Garagekeepers Coverage) provides this coverage.

Question 6

Specified Causes of Loss under Physical Damage Coverage of the Business Auto Coverage Form includes all of the following, except:

Windstorm, hail or earthquake

Theft

Glass breakage

Flood

Answer 6

Glass breakage.

Specified Perils Coverage is similar to Comprehensive (or Other than Collision) Coverage, but it is a specified perils form and glass breakage is not specified as an insured peril.

Question 7

The Garage Liability section of the Garage Coverage Form covers which of the following?

Property damage for which the insured is legally responsible

Injuries covered by Workers’ Compensation

Property in the care and custody of the insured

Product recall

Answer 7

Property damage for which the insured is legally responsible

Section II provides bodily injury and property damage liability coverage for losses resulting from garage operations. In addition, the form includes coverage for Premises and Operations Liability, Products Liability, and Completed Operations Liability. The section does not cover property in the care and custody of the insured, injuries covered by Workers’ Compensation, and liability arising from pollution or product recall.

Question 8

What is the name for insurance covering the amount an insured is legally obligated to pay for loss to a customer’s vehicle in the insured’s care?

Business auto coverage

Garage coverage form

Garagekeepers coverage

Garage product liability

Answer 8

Garagekeepers coverage

Garagekeepers coverage pays for loss or damage to a customer’s vehicle and equipment while in the insured’s care for servicing, repair, parking, or storing.

Question 9

Which of the following autos is covered under Symbol 9 of the Business Auto Coverage Form?

An auto borrowed by the insured

An auto owned by the insured’s employee while used in the insured’s business

An auto leased or hired by the insured

Any auto not used in the insured’s business

Answer 9

An auto owned by the insured’s employee while used in the insured’s business.

Non-owned Autos Only Coverage, Symbol 9, provides coverage for only those autos the insured does not own, lease, hire, rent or borrow, which are used in connection with the insured’s business. This includes autos owned by the employees or members of their household.

Question 10

Which vehicle would not be eligible for a Business Auto Coverage Form?

A trailer that is used to carry a backhoe

A private passenger auto that is used in the business

A forklift used in the business

A van that is used by a delivery firm

Answer 10

A forklift used in the business.

Being mobile equipment, a forklift is not eligible for auto coverage, other than by endorsement.

Question 11

Choose the false statement regarding commercial auto coverage.

Section II of the Garage Coverage Form does not provide physical damage coverage to a customer’s car

Section IV of the Garage Coverage Form provides coverage for the insured’s owned autos

Section II of the Garage Coverage Form - does not provide completed operations coverage

The Business Auto Coverage Form will cover liability arising from mobile equipment being carried or towed

Answer 11

Section II of the Garage Form - does not provide completed operations coverage

Section II of the Garage Coverage Form provides bodily injury and property damage liability coverage for losses resulting from garage operations. In addition, the form includes coverage for Premises and Operations Liability, Products Liability, and Completed Operations Liability.

Question 12

The Business Auto Coverage Form is intended for which of the following businesses?

Owned, leased, hired or borrowed private passenger autos only

Owned, leased, or hired trucks, trailers and semi-trailers only

Owned or hired trucks, trailers and semi-trailers only

Owned, leased, hired or borrowed private passenger autos, trucks, trailers and semi-trailers

Answer 12

Owned, leased, hired or borrowed private passenger autos, trucks, trailers, and semi-trailers.

Question 13

Which type of Commercial Auto policy would be best suited for a parking garage business?

Garage Coverage Form

Truckers Coverage Form

Business Auto Coverage Form

Motor Carrier Coverage Form

Answer 13

Garage Coverage Form

The Garage Coverage Form is designed to provide coverage for businesses engaged in the sale, service, parking, or storage of automobiles. Eligible businesses include automobile vehicle dealerships, sales agencies, repair shops, service stations, storage garages, and public parking places.

Question 14

Which of the business auto coverage forms provides insurance for a contract carrier that transports its own goods in addition to the goods owned by others?

Garage Coverage Form

Motor Carrier Coverage Form

Truckers Coverage Form

Business Auto Coverage Form

Answer 14

Motor Carrier Coverage Form

The Motor Carrier Coverage Form provides coverage for contract carriers for the transportation of goods, for hire, that are owned by others and transporting their own property.

Question 15

All of the following regarding the Garage Coverage Form are correct, except:

It provides automobile liability, physical damage, and general liability insurance for auto businesses

Coverage is typically written using a blanket limit of insurance

It provides physical damage coverage for covered autos the named insured owns, hires, rents, leases, or borrows

It provides coverage for product recall

Answer 15

It provides coverage for product recall.

The Garage policy does not cover property in the care and custody of the insured, injuries covered by Workers’ Compensation, and liability arising from pollution or product recall.

Question 16

Flood is a specified cause of loss under which section of the Garage Coverage Form?

Section IV

Section I

Section II

Section III

Answer 16

Section IV

The Section IV specified perils are the same as those found in the BAP, which includes damage for flood The Section III specified perils are more restrictive, including only fire, lightning, explosion, theft, mischief, and vandalism.

Question 17

The limit of insurance that the insurer will pay for a physical damage loss is the:

Actual Cash Value

Lesser of the ACV or the cost to repair or replace with like kind and quality

Greater of the ACV or the cost to repair or replace with like kind and quality

Replacement cost

Answer 17

Lesser of the ACV or the cost to repair or replace with like kind and quality.

The most the insurer will pay for damaged or stolen property in any one accident is the lesser of the ACV or the cost of repairing or replacing with property of like kind and quality.

Question 18

Which of the following is not covered under Comprehensive Coverage under the Business Auto Coverage Form?

Theft

Collision

Glass Breakage

Fire and Lightning

Answer 18

Collision.

Comprehensive Coverage under the Business Auto Coverage Form is an open perils coverage that covers damage from perils not excluded. Collisions are excluded.

Question 19

All of the following are true of the Business Auto Coverage Form, except:

Medical payments coverage may be added by endorsement

Coverage is primary on owned autos and excess on non-owned autos

Uninsured Motorist Coverage is included in Section II

Coverage may be written on owned private passenger autos

Answer 19

Uninsured Motorist Coverage is included in Section II

Section II of the BAP provides liability coverage. Uninsured Motorist coverage is provided by optional endorsement.

Question 20

Which source of liability would a trucker be liable for under a Motor Carrier Coverage Form?

Cargo damage from overturn

Acts of God

Faulty packing by a Shipper

Exercise of Public Authority

Answer 20

Cargo damage from overturn.

The Motor Carrier Coverage Form provides Trailer Interchange Coverage, which protects against physical damage such as comprehensive and/or collision coverage.

Question 21

Garagekeepers Coverage will cover which of the following claims?

Damage to the products for sale

Physical damage to a customer’s car that is in the care and custody of an insured

Product liability exposures

An owned vehicle used in the business, that is damaged by a hail storm

Answer 21

Physical damage to a customer’s car that is in the care and custody of an insured.

Garagekeepers Coverage pays for damage to customer’s cars in the care and custody of the insured.

Question 22

All of the following are general conditions of the BAP, except:

Premium audit

Concealment, misrepresentation, or fraud

Duties in the event of an accident

No benefit to bailee for physical damage

Answer 22

Duties in the event of an accident.

Duties in the event of an accident is a loss condition under the BAP, not a general condition.

Question 23

All of the following are true of the Business Auto Coverage Form, except:

It covers liability from mobile equipment while being towed

It does not include contractual liability coverage

It provides no-fault coverage in states that require it

It covers injuries to employees

Answer 23

It covers injuries to employees

Injuries to employees would be covered under Workers’ Compensation

Question 24

Which section of the BAP provides auto medical payments coverage?

Section III

This coverage is available by endorsement only

Section II

Section I

Answer 24

This coverage is available by endorsement only

Commercial auto policies do not automatically provide medical payments coverage, which must be added by endorsement.

Question 25

Which of the following is not covered under Section II of the Garage Coverage Form?

Products liability

Damage to the customer’s car in the insured’s care

Premise and operations liability

Completed operations liability

Answer 25

Damage to the customer’s car in the insured’s care.

Question 26

Which of the following autos is covered under Symbol 9 of the Business Auto Coverage Form?

An auto borrowed by the insured

An auto leased or hired by the insured

Any auto not used in the insured’s business

An auto owned by the insured’s employee while used in the insured’s business

Answer 26

An auto owned by the insured’s employee while used in the insured’s business.

Question 27

Which of the following is true concerning the Limit of Liability under the Business Auto Coverage Form?

The Limit of Liability is determined by the number of vehicles scheduled on the policy

The Limit of Liability is the most the policy will pay for any single accident

The Limit of Liability is determined by the number of the insured’s vehicles involved in the accident

The Limit of Liability is the amount available for each claim made under the policy

Answer 27

The Limit of Liability is the most the policy will pay for any single accident.

The Limit of Liability is the most the policy will pay resulting from any one accident regardless of the number of autos, insureds, premiums paid, claims made, or vehicles involved in the accident.

Question 28

Which of the following would not be a covered auto under the Business Auto Policy Mobile Equipment endorsement?

Forklift

Truck operated on public roads

Truck with a mounted power crane

Bulldozer

Answer 28

Truck operated on public roads.

A truck licensed and registered for use on public roads would be covered under the standard BAP, without need for an endorsement.

Question 29

Which would be covered under the Business Auto Coverage Form?

A vehicle repaired for others

A borrowed truck used in the insured’s business

Dealer inventory

A trailer stored for another person

Answer 29

A borrowed truck used in the insured’s business.

The BAP covers owned, leased, hired, rented, or borrowed cars, trucks, trailers, and semi-trailers owned and used by a business.

Question 30

The Business Auto Coverage form covers all of the following, except:

Owned private passenger autos
Automatic coverage for physical damage to trailers
Automobiles owned by employees used for business purposes
Mobile equipment registered to drive on public roads

Answer 30

Automatic coverage for physical damage to trailers.

Owned trailers used by businesses may be covered for physical damage coverage but it is not automatic coverage.

Question 31

What symbol….

Any auto, if it is used in the insured business, regardless of ownership

Answer 31

Symbol 1

Question 32

What Symbol…

Owned Autos Only, whether or not specifically listed on the policy

Answer 32

Symbol 2

Question 33

What Symbol…
Owned Private Passenger Autos Only; a business may wish to provide insurance differently for its cars than for its dump trucks or vehicles used for delivery

Answer 33

Symbol 3

Question 34

What Symbol…

Owned Autos Other Than Private Passenger Autos Only

Answer 34

Symbol 4

Question 35

What Symbol…

Owned Autos Subject to No Fault Laws

Answer 35

Symbol 5

Question 36

What Symbol…

Owned Autos Subject to a Compulsory Uninsured Motorist Law

Answer 36

Symbol 6

Question 37

What Symbol…

Specifically described vehicles listed on the declarations page

Answer 37

Symbol 7

Question 38

What Symbol…
Hired Autos Only, which are those the insured leases, hires, rents or borrows, except any auto the insured leases, hires, rents, or borrows from an employee. These vehicles may not be owned by the insured.

Answer 38

Symbol 8

Question 39

What Symbol…
Non-owned Autos Only, which are those the insured does not own, lease, hire, rent or borrow, and are used in connection with the insured’s business. This includes autos owned by an employee of the insured or a member of the employee’s household.

Answer 39

Symbol 9

Question 40

What Symbol…
Mobile Equipment Subject to Compulsory or Financial Responsibility or Other Vehicle Insurance Law, which triggers protection for autos that are otherwise described as “mobile equipment”, but are required to be licensed and registered to be operated on public roadways. This symbol is necessary since mobile equipment is excluded from the definition of “auto” under the business auto policy.

Answer 40

Symbol 19

Question 41

Which of the following is not a Symbol under Section I – Covered Autos?

Specifically described on Declarations

Dealers auto liability coverage

Owned Autos Subject to No Fault

Any auto

Answer 41

Dealers auto liability coverage

Question 42

Which of the following is NOT an “insured” under the Business Auto Coverage form?

Named insured

Fellow employee

Person using a borrowed auto with permission of the insured

Person liable for the conduct of the insured

Answer 42

Fellow employee.

Under Section II – Liability coverage bodily injury liability coverage does not apply to a fellow employee.

Question 43

What is the maximum the insurer will pay for a covered transportation expenses claim?

$400

$200

$600

$800

Answer 43

$600.

Question 44

General Conditions in the business auto policy apply to which of the following?

Transfer of rights

Legal action against the insured

Bankruptcy

Appraisal

Answer 44

Bankruptcy.

Question 45

Any type of land vehicle, including any attached machinery or equipment that isn’t required to be registered to operate on public road.

Answer 45

Mobile equipment.

Question 46

Which of the following covers the insured’s legal obligations for damage to a customer’s car?

Garagekeepers

General Liability

Physical damage

Auto Liability

Answer 46

Garagekeepers

Garagekeeprs coverage is the Garage Coverage form to eliminate possible coverage gaps.

Question 47

What Symbol…

“Autos” left with the insured for service, repair, storage, or safekeeping

Answer 47

Symbol 30

Question 48

What Symbol…

Dealers “autos” physical damage coverages”

Answer 48

Symbol 31

Question 49

Which of the following is NOT one of the five symbol designations on the Business Auto Physical Damage Coverage form?

Owned autos only

Hired autos only

Autos left for service

Specifically described autos

Answer 49

Autos left for service

The other two symbols are owned private passenger autos only and owned autos other than private passenger autos only.

Question 50

All of the following statements regarding a common carrier covered under the Truckers and Motor Carrier Coverage form are correct, except:

A common carrier must use the Trucker Coverage Form

A common carrier can also use the Motor Carrier Coverage Form

A trucker that transports goods belonging to several customers at the same time

A business individual that carries the general public from one place to another for a fee

Answer 50

A common carrier must use the Trucker Coverage Form

A common carrier can either use the Trucker Coverage Form or the Motor Carrier Form.

Question 51

What coverage under the Motor Carrier Coverage form provides physical damage coverage for non-owned trailers and equipment in the event of an at-fault accident?

Trailer Interchange Coverage

Other Insurance Clause

Commercial Truckers Coverage

Truckers Physical Damage Coverage

Answer 51

Trailer Interchange Coverage

This coverage is included because truckers and motor carriers may hire independent operators to drive the owned vehicle.

Question 52

Which of the following is true about the Individual Named Insured endorsement?

Protects the named insured who does not own a car

Applies to all resident family members

Adds business coverage to a personal private passenger auto

Coverage is provided only to those individuals listed on a schedule

Answer 52

Applies to all resident family members.

The individual Names Insured endorsement adds all resident family members to the Business Auto Coverage form in order to allow member permission to drive business autos.

Question 53

Which coverage is not available under the Garage Coverage Form?

Physical damage coverage

Advertising liability

Product liability

Garagekeepers coverage

Answer 53

Advertising Liability.

Other provided coverages include premises liability and auto liability.

Question 54

All of the following are loss conditions of the BAP, except:

Examination of Your Books and Records

Duties in the event of an accident

Transfer of rights of recovery

Legal action against the insurer

Answer 54

Examination of Your Books and Records

The Examination of Your Books and Records condition is a common policy condition of the CPP

Question 55

Which of the following is not a specified loss under the garagekeepers section of the Garage Coverage Forms?

Windstorm

Vandalism

Fire

Theft

Answer 55

Windstorm.

While windstorm is a covered peril under the specified causes of loss of the BAP, under Section III (garagekeepers coverage) the Garage policy these causes of loss include only fire, lightning, explosion, theft, mischief, and vandalism.

Question 56

Which coverage form covers business exposures of motor carriers for hire who transport the goods of others?

Motor Carrier

Contract Carrier

Symbol 30 under the Business Auto

Truckers

Answer 56

Truckers.

The Truckers Coverage Form covers the business exposures of motor carriers for hire who transport the goods of others.

Question 57

Section II of the Garage Coverage Form does not cover:

Damage to the customer’s car in the insured’s care

Premise and operations liability

Completed operations liability

Products liability

Answer 57

Damage to the customer’s car in the insured’s care.

Section II (Liability) Coverage does not cover vehicles in the insured’s care, custody, or control. Section III (Garagekeeprs provides this coverage)

Question 58

Mobile equipment does not include which of the following?

Motor vehicles designed for road use

Vehicles that travel on crawler treads

Resurfacing equipment mounted on a vehicle

Farm machinery designed for off-road use

Answer 58

Motor vehicles designed for road use.

Question 59

All of the following must be listed on Form MCS-90, except:

The policy number and policy dates

The limits of liability provided by the policy

The policy premium amount

The names of the motor carrier and the insurance company

Answer 59

The policy premium amount.

Must show the names of the motor carrier and the insurance company; the policy number and policy dates; whether the insurance providing coverage is primary or excess; and the limits of liability by the policy.

Question 60

Which of the following would not be eligible for coverage under the Business Auto Coverage Form?

A private passenger automobile owned by the insured and used in the insured’s business

The insured for an employee’s use of a personal auto in the insured’s business

An employee injured using the employee’s personal auto in insured’s business

A tractor-trailer used in the insured’s business

Answer 60

An employee injured using the employee’s personal auto in insured’s business.

WORKERS COMP

Question 61

Which Business Auto Symbol provides the broadest coverage?

2

9

1

3

Answer 61

1.

Symbol 1 includes any auto, whether owned or not by the insured if it is used in the insured’s business. The other choices refer only to owned autos only (2 and 3) or non-owned autos only (9)

Question 62

Under the Motor Carrier Coverage Form, Trailer Interchange Coverage would cover which of the following losses?

Joe’s company is legally liable for bodily injury sustained by an employee

Joe’s company is legally liable for physical damage sustained by a non-owned trailer

Joe’s truck sustains damage in a collision

Joe’s truck causes property damage in a collision

Answer 62

Joe’s company is legally liable for physical damage sustained by a non-owned trailer.

Trailer Interchange coverage is physical damage coverage for non-owned trailers and their equipment if they sustain a loss and the insured is legally responsible for the damage.

Question 63

Which statement regarding the Medical Payments Coverage of the Business Auto Policy is true?

Coverage is limited to medical expenses incurred in the first year after the accident

Medical Payments Coverage also pays loss of income during disability arising from a covered accident

The BAP does not automatically include Medical Payments Coverage

Medical Payments Coverage is designed to provide medical payments coverage for employees

Question 64

Choose the false statement about commercial auto coverage.

Specified Peril Coverage pays for damage to an insured vehicle from almost any cause except collision

Garagekeepers Insurance provides coverage for damage to a customer’s car

The Motor Carrier Coverage Form provides coverage for business exposures due to the transportation of goods owned by others for hire and transporting their own property

A Garage Coverage Form will cover legal liability from completed operations

Answer 64

Specified Peril Coverage pays for damage to an insured vehicle from almost any cause except collision

Specified Peril Coverage provides coverage only for certain named perils such as fire.

Question 65

Physical damage coverage under a Business Auto Coverage Form includes all of the following, except:

Uninsured Motorist Coverage

Specified Causes of Loss

Collision Coverage

Comprehensive Coverage

Answer 65

Uninsured Motorist Coverage

The three types of physical damage coverage under the BAP are collision, comprehensive, and specified perils. Uninsured Motorist is a separate coverage added by endorsement.