Personal Automobile Policies Flashcards

An insured with a standard Personal Auto Policy (PAP) uses their vehicle to transport passengers for a fee through a popular ride-sharing service. While logged into the app and awaiting a passenger, they negligently cause an accident. How will the Liability coverage (Part A) of their PAP typically respond?

Answer: The claim will be denied due to the livery conveyance exclusion.

Standard Personal Auto Policies contain a "livery conveyance" exclusion, which specifies that coverage is not provided while the insured vehicle is being used to transport people or property for a fee. Driving for a ride-sharing service falls under this exclusion.

Which of the following losses to an insured's vehicle would be covered under Part D - Damage to Your Auto, specifically by Other Than Collision (Comprehensive) coverage?

Answer: The vehicle is damaged when it strikes a deer that runs into the road.

Other Than Collision, also known as Comprehensive coverage, pays for direct and accidental losses to the covered auto from perils other than collision. Perils specifically listed as 'other than collision' include fire, theft, windstorm, hail, and contact with a bird or animal. The other options describe collision events.

An insured, who has a Personal Auto Policy (PAP) with Medical Payments coverage, is injured when they are struck by a car while jogging. How does their Medical Payments coverage apply to their injuries?

Answer: It will pay for reasonable and necessary medical expenses, regardless of who was at fault for the accident.

Medical Payments coverage is a no-fault coverage that applies to the named insured and family members if they are injured while occupying a motor vehicle OR as a pedestrian when struck by a motor vehicle. It pays for reasonable medical expenses without regard to fault.

An insured carries a Personal Auto Policy (PAP). They give their friend, who also has a PAP, permission to borrow their car. The friend causes an at-fault accident. How will the liability coverages of the two policies respond to the third-party claim?

Answer: The car owner's policy is primary, and the driver's policy is excess.

The general rule in auto insurance is that the insurance follows the car. Therefore, the policy covering the vehicle involved in the accident is considered the primary source of liability coverage. The at-fault driver's policy is considered excess and would only apply after the primary policy's limits are exhausted.

What is the primary function of Part C - Uninsured Motorist (UM) Coverage in a Personal Auto Policy?

Answer: To cover the insured's bodily injury expenses caused by an at-fault driver who lacks liability insurance.

Uninsured Motorist (UM) coverage is designed to protect the insured for their own bodily injuries when they are in an accident caused by an at-fault driver who has no liability insurance, is a hit-and-run driver, or whose insurer is insolvent.

An insured drives their personal vehicle from Arizona into Mexico for a weekend vacation. While in Mexico, they cause an accident resulting in property damage and bodily injury to others. How will their standard, unendorsed US Personal Auto Policy respond?

Answer: The claim will be denied because the standard policy territory does not include Mexico.

The policy territory for a standard Personal Auto Policy is limited to the United States, its territories and possessions, Puerto Rico, and Canada. To be covered while driving in Mexico, the insured must purchase a separate policy from a licensed Mexican insurer or add a specific, limited endorsement to their US policy, which is not standard.