Motor Vehicle Division Insurance Requirements 1 — Questions and Answers
Question 1: What does liability insurance cover in an auto insurance policy?
- Damage to your own vehicle from an accident you caused
- Medical expenses for you and your passengers only
- Damage and injuries you cause to others in an accident (Correct answer)
- Theft or vandalism of your vehicle
Correct answer: Damage and injuries you cause to others in an accident
Liability insurance covers bodily injury and property damage that you cause to others, not damage to your own vehicle.
Question 2: What is the primary purpose of uninsured motorist (UM) coverage?
- To cover damage caused by natural disasters
- To protect you when hit by a driver with no insurance (Correct answer)
- To pay for your medical bills in any accident regardless of cause
- To replace your vehicle if it is stolen
Correct answer: To protect you when hit by a driver with no insurance
Uninsured motorist coverage protects you when you are involved in an accident caused by a driver who has no auto insurance.
Question 3: Which document is commonly accepted as proof of insurance when requested by law enforcement?
- Vehicle registration certificate
- Insurance identification card (Correct answer)
- Driver's license
- Vehicle inspection report
Correct answer: Insurance identification card
An insurance identification card issued by the insurer is the standard document used to prove financial responsibility to law enforcement.
Question 4: What is a common consequence of driving without proof of insurance?
- Automatic license suspension for 5 years with no appeal
- Vehicle confiscation with no possibility of recovery
- Fines, license suspension, and possible vehicle impoundment (Correct answer)
- Mandatory completion of a defensive driving course only
Correct answer: Fines, license suspension, and possible vehicle impoundment
Driving without insurance typically results in fines, possible license suspension, and vehicle impoundment, depending on state law.
Question 5: In auto insurance, what does a '25/50/25' policy limit mean?
- $25,000 for property damage, $50,000 for medical, $25,000 for collision
- $25,000 per person bodily injury, $50,000 per accident bodily injury, $25,000 property damage (Correct answer)
- 25% deductible, 50% coverage cap, 25% out-of-pocket maximum
- Coverage for 25 months, up to $50,000 total, with a $25 deductible
Correct answer: $25,000 per person bodily injury, $50,000 per accident bodily injury, $25,000 property damage
The 25/50/25 notation means $25,000 per injured person, $50,000 per accident for all bodily injuries combined, and $25,000 for property damage.
Question 6: When is an SR-22 form typically required?
- When purchasing a new vehicle for the first time
- After certain traffic violations or license suspensions to prove financial responsibility (Correct answer)
- When applying for a commercial driver's license
- When a vehicle registration is due for renewal
Correct answer: After certain traffic violations or license suspensions to prove financial responsibility
An SR-22 is a certificate of financial responsibility filed by an insurer with the state, typically required after DUIs, serious traffic violations, or license suspensions.
Question 7: What is 'no-fault' auto insurance?
- Insurance that only covers accidents where neither driver is at fault
- A system where each driver's own insurer pays their losses regardless of who caused the accident (Correct answer)
- Insurance that provides coverage with no deductible required
- A policy that cannot be cancelled or non-renewed by the insurer
Correct answer: A system where each driver's own insurer pays their losses regardless of who caused the accident
In no-fault states, each driver's own insurance pays for their medical expenses and lost wages regardless of who caused the accident, limiting the right to sue.
Motor Vehicle Division Insurance Requirements 1
What does liability insurance cover in an auto insurance policy?