Policy Coverage and Exclusions Flashcards
7 cards from real CAIA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Policy Coverage and Exclusions flashcards as text
A vehicle sustains flood damage from a hurricane. Which coverage pays for the damage?
Answer: Comprehensive (other than collision) coverage
Flood damage is a weather-related peril covered under comprehensive (other than collision) coverage.
The 'at-fault' driver has liability limits of $25,000, but the victim's damages total $60,000. The victim has UIM coverage with $50,000 limits. How much can the victim's UIM pay?
Answer: $35,000 (the gap between actual damages and at-fault limit)
UIM coverage pays the difference between the at-fault driver's liability payment and the victim's actual damages, up to the UIM policy limit.
Which policy condition requires the insured to promptly notify the insurer after an accident?
Answer: Duties after an accident condition
The 'duties after an accident or loss' condition obligates the insured to notify the insurer promptly and cooperate in the investigation.
An insured rents a car while on vacation. Their PAP includes liability coverage. How does it apply to the rental?
Answer: PAP liability typically extends to non-owned vehicles used temporarily
PAP liability coverage extends to non-owned vehicles, such as rentals, used temporarily by the named insured.
A vehicle is stolen and recovered two months later with significant interior damage. Which coverage applies to the interior damage?
Answer: Comprehensive coverage
Damage occurring as a result of theft or vandalism during the theft is covered under comprehensive coverage.
What is the purpose of the 'other insurance' clause in an auto policy?
Answer: It coordinates payment when more than one policy covers the same loss
The other insurance clause establishes whether a policy responds as primary or excess when multiple policies cover the same loss.
Under a standard PAP, which of the following vehicles is considered a 'covered auto' without needing an endorsement?
Answer: A newly acquired replacement vehicle during the first 14 days
PAPs automatically cover newly acquired replacement vehicles for a grace period (typically 14 days) without a formal endorsement.