RMIN Test 5

Question 1

Personal Automobile Policy (PAP): Eligible Vehicles

Answer 1

Private Passenger Auto
Sport Utility Vehicle (SUV)
Station Wagon
Truck or Van less than 10,000 pounds

Question 2

Personal Automobile Policy (PAP): Your Covered Auto

Answer 2

Any auto shown in the declarations
A “newly acquired auto”
A “trailer” owned by the named insured
A temporary substitute vehicle

Question 3

Personal Automobile Policy (PAP): Who has liability coverage?

Answer 3

• The named insured and any resident family member
• Any person using the named insured’s covered auto with permission
• Any person or organization legally responsible for any insured’s use of a covered auto on behalf of that person or organization. (someone doing charity work)

Question 4

For Part A: Liability Coverage: What is the insuring agreement?

Answer 4

insurer promises to…
- pay damages for which an insured person is legally liable
- defend the insured
- pay the costs of defense

Question 5

For Part A: Liability Coverage: How is the current PAP usually written?

Answer 5

The current PAP is usually written with split limits , but it can be written with a single limit that applies to both bodily injury liability and property damage liability

Question 6

For Part A: Liability Coverage: What is the limiting liability?

Answer 6

the PAP is most often written with split limits:
- The first two numbers are for bodily injury liability, the last number is for property damage.
- So limits of 100/300/50 translate to $100,000 of bodily injury per-person, subject to a limit of $300,000 for bodily injury per-accident, and $50,000 for property damage.

Question 7

For Part A: Liability Coverage:
Out-of-state coverage

Answer 7

policy automatically adjusts to comply with the financial responsibility or “no-fault” law of another state

Question 8

For Part A: Liability Coverage:
Other Insurance

Answer 8

if two auto policies cover a loss to an owned automobile, each company pays its pro rata share of the loss

If the insured is driving someone else’s car and has an accident, the insurance on the borrowed car is primary and the insured’s policy is excess

Question 9

For Part A: Liability Coverage: Exclusions

Answer 9

some important exclusions are:

intentional injury
property owned or transported
property rented to or in the insured’s care
workers compensation claims
using the vehicle as a public or livery conveyance
other business vehicles
using a vehicle without a reasonable belief of permission
nuclear energy exclusion
using vehicles with fewer than four wheels

Question 10

Part B: Medical Payments Coverage: Insuring Agreement

Answer 10

all reasonable medical and funeral expenses incurred within three years of the date of the accident are paid

Question 11

Part B: Medical Payments Coverage: Insured persons

Answer 11

The named insured and family members while occupying a motor vehicle:
– While occupying any motor vehicle.
– As pedestrians when struck by a motor vehicle

Question 12

Part B: Medical Payments Coverage: Exclusions to Medical Payments Coverage

Answer 12

– Occupying any vehicle with fewer than four wheels
– Public or livery conveyance (taxis,Uber/Lyft)
– Using the vehicle as a residence
– Vehicle used during the course of employment

Question 13

Part C: Uninsured Motorists Coverage: Insuring Agreement

Answer 13

coverage applies when the other person is legally liable and has no liability insurance

Question 14

Part C: Uninsured Motorists Coverage: Insured person

Answer 14

– named insured and family members
– other persons while occupying a covered auto
– Any person legally entitled to recover damages (surviving spouse)

Question 15

Part C: Uninsured Motorists Coverage: Uninsured vehicles

Answer 15

Includes vehicles that:

• Have no applicable bodily injury liability coverage
• Carry less than the minimum coverage required by state law
• Are involved in hit-and-run accidents
• Are insured by a company that is insolvent

Question 16

Part D: Coverage for Damage to Your Auto: Insuring Agreement

Answer 16

Covers direct and accidental loss to a covered auto or non-owned auto

2 types: Collison Coverage and Other-Than-Collision (OTC) Coverage

Question 17

Part D: Coverage for Damage to Your Auto: Collison Coverage

Answer 17

Upset of your covered auto ot non-owned auto or its impact with another vehicle or object
Paid regardless of fault
Ex:
Cars overturns on icy road
Car hits another car, telephone pole, tree, or building.
You bang your car door against another car damaging your door.

Question 18

Part D: Coverage for Damage to Your Auto: Other-than-Collision

Answer 18

Loss for losses that are not excluded. Also referred to as Comprehensive (Comp). Loss due to the following perils:

Missiles or falling objects
Hail, water, flood, fire, windstorm
Theft or larceny
Explosion or earthquake
Malicious mischief or vandalism
Riot or civil commotion
Contact with a bird or animal
Glass breakage

Question 19

Part D: Coverage for Damage to Your Auto: Loss Settlement

Answer 19

– For a total loss, actual cash value (ACV) is paid. (ACV= depreciated amount)
– For a partial loss , pays the amount required to repair or replace the damaged property with like kind and quality

Deductibles
May be different for comp and collision.
Some insureds prefer lower comprehensive deductibles due to glass claims.

Diminution in Value (DIV)
Loss in market or resale value.
May be owed depending on the state.

Question 20

Part E: Duties after an Accident of Loss:
After an accident, the insured must:

Answer 20

– Promptly notify the insurance company or agent
– Cooperate with the insurer in the investigation
– Send the insurer copies of any legal notices received in connection with an accident

The insurer is allowed to inspect your vehicle prior to repair/disposal if you are seeking coverage under Part D.

Question 21

Part E: Duties after an Accident of Loss: Notify the police:

Answer 21

• If a hit-and-run driver is involved.
• Vehicle is stolen

Question 22

Compulsory Insurance Laws

Answer 22

Require motorists to carry at least a minimum amount of
liability insurance before the vehicle can be licensed or registered

Question 23

Uninsured Motorists Coverage

Answer 23

the injured person’s insurer agrees to pay the accident victim who has a bodily injury (or property damage is some states) caused by an uninsured motorist, by a hit-and-run driver, or by a negligent driver whose insurer is insolvent

Question 24

No-Fault Auto Insurance

Answer 24

after an auto accident involving a bodily injury, each party collects from his or her own insurer regardless of fault

types of No-Faults Plans: Pure no-fault plan and Modified no-fault plan

Question 25

Pure no-fault plan (type of No-Faults Plan)

Answer 25

accident victims cannot sue at all, regardless of the amount of the claim. No state has enacted a pure no-fault law

Question 26

Modified no-fault plan (type of No-Faults Plan)

Answer 26

an injured person has the right to sue a negligent driver only if the bodily injury claim exceeds the dollar or verbal threshold.

Question 27

Major Rating Factors

Answer 27

1. Territory 2. Age, gender, and marital status 3. Use of the auto 4. Driver education 5. Good student discount 6. Number and type of cars 7. Individual driving record 8. Insurance score

Question 28

HO-2 (Broad Form)

Answer 28

covers the dwelling, other structures, and personal property on a named perils basis

Question 29

HO-3 (Special Form)

Answer 29

covers the dwelling and other structures on a risk-of-direct-physical loss basis

Question 30

HO-4 Contents (Broad Form)(Contests Form)

Answer 30

covers a tenant’s personal property on a named perils basis (personal property of owner)

Question 31

HO-5 (Comprehensive Form)

Answer 31

provides open perils coverage (“all-risks coverage”) on the dwelling, other structures and personal property

Question 32

HO-6 Unit-Owners (Broad Form), Condo

Answer 32

covers personal property on a named perils basis - A minimum of $5,000 of insurance is also provided on the condominium unit that covers improvements and additions

Question 33

HO-8 Modified Coverage Form

Answer 33

designed for older homes

Question 34

Homeowners Policy- Persons Insured The following persons are considered “insureds” under the policy:

Answer 34

* Named insured and spouse * Resident relative * Other persons under age 21 * Full-time student away from home

Question 35

Homeowners Policy- Persons Insured (Section II Coverage) also includes:

Answer 35

1. Named insured and spouse 2. Resident relative 3. Other persons under age 21 4. Full-time student away from home additionals under section II: 5. Person legally responsible for covered animals or watercraft (neighbor walking your dog) 6. Employees using covered motor vehicles (like a riding mower) – as long as the vehicle is covered under the policy.

Question 36

Homeowners Policy Coverage Section 1

Answer 36

Coverage A: Dwelling Coverage B: Other Structures Coverage C: Personal Property Coverage D: Loss of Use

Question 37

Coverage A: Dwelling

Answer 37

Covers: -- The dwelling (house) on the residence premises. -- Structures attached to the dwelling. -- Materials intended for construction. -- No coverage for land

Question 38

Coverage B: Other Structures

Answer 38

Covers other structures on the residence premises set apart from the dwelling by clear space. Examples Detached garage Shed (if on a foundation) Fence Structures that are rented out or used for business are excluded

Question 39

Coverage C: Personal Property

Answer 39

-- Covers personal property owned or used by an insured while it is anywhere in the world. -- The amount of coverage is 50% of Coverage A -- Coverage for personal property at another residence or in storage is limited to 10% of the Coverage C limit or $1,000, whichever is greater.

Question 40

Coverage D: Loss of Use

Answer 40

-- Provides protection when the residence premises cannot be used because of a covered loss (told by civil authorities) -- Coverage is 30% of Coverage A Includes: Additional Living Expenses Fair Rental Value Prohibited Use - civil authority prohibits the insured from using the premises

Question 41

Special Limits of Liability

Answer 41

Can be schedule to the policy listing the property with specific amounts of insurance

Question 42

Additional Coverage in Section 1

Answer 42

-- Removal of debris following an insured peril -- Reasonable repairs to protect the property from further damage -- Trees, shrubs, and plants, for a limited set of perils -- Fire department service charge -- Removal of property that is endangered by an insured peril -- Unauthorized use of credit card, electronic fund transfer card or access device, forgery and counterfeit money -- Loss assessment charged against the named insured by a corporation or association of property owners because of the direct loss of property collectively owned by all members -- Collapse of a building, for certain perils -- Breakage of glass or safety glazing material -- Increased costs of construction or repair because of an ordinance or law

Question 43

Section II

Answer 43

Coverage E: Personal Liability Coverage F: Medical Payment to Others

Question 44

Coverage E: Personal Liability

Answer 44

-- Protects an insured when a claim or suit for damages is brought because of bodily injury or property damage allegedly caused by an insured’s negligence -- Pays amount for which the insured is found legally liable(court orders are legally liable) , up to policy limits. -- Insurer also pays defense costs. -- The insurer provides a legal defense, even if the suit is frivolous or fraudulent

Question 45

Coverage F: Medical Payments to Others

Answer 45

-- Pays the reasonable expenses of another person who is accidentally injured: -- while on the insured location, -- or by the activities of an insured or residence employee on or off site -- or animal owned by or in the care of an insured on or off site -- Medical expenses incurred within 3 years of an accident are covered Not based on legal liability

Question 46

How are losses to personal property typically paid under a standard homeowners policy?

Answer 46

On the basis of actual cash value (replacement cost minus depreciation)

Question 47

What happens if the insured has a replacement cost endorsement or an HO-5 policy?

Answer 47

No deduction for depreciation—losses to personal property are paid on a replacement cost basis.

Question 48

How are losses to the dwelling and other structures paid?

Answer 48

On a replacement cost basis with no deduction for depreciation

Question 49

When are partial dwelling losses paid in full?

Answer 49

If the dwelling is insured for at least 80% of the replacement cost at the time of loss

Question 50

Replacement cost

Answer 50

The amount needed to repair or replace the dwelling with materials of like kind and quality at current prices

Question 51

Duties after a homeowner loss:

Answer 51

-- Give prompt notice to insurer -- Protect the property from further damage -- Prepare an inventory of damaged personal property -- Exhibit damaged personal property -- File a proof of loss with 60 days after the insurer’s request

Question 52

Rating Varible for Homeowners

Answer 52

Construction Type Geographic Location Fire Protection Reconstruction Cost Form Type Year of Construction Deductible Insurance Score Roof Factors Policy limits