AINS 23 Ch. 8 (Commercial Auto) / CPCU 552 Ch. #4 Questions with Correct
Answers
Question 1:
$35,000. Each party selected an appraiser, and the two appraisers chose an umpire. The
insured's appraiser came up with a value of $30,000, while the insurer's appraiser came up with
a value of $24,000. The umpire agreed with the insured's appraiser. The fee for the insured's
appraiser was $750, the insurer's appraiser was $950, and the umpire was $600. The total cost
to the insurance company for this loss is:
$30,000.
$30,950.
$31,250.
$31,550
Answer:
C EXPLANATION:
The total cost to the insurance company for this loss is $31,250. The insurance company will
pay for the amount of loss agreed to by two of the three appraisers, the fee for its own
appraiser, and half of the cost for the umpire.
Question 2:
One of the conditions found in the Business Auto Coverage Form addresses the bankruptcy or
insolvency of the named insured. Which one of the following statements about claims
settlement in the event of bankruptcy of the insured is most accurate?
If the insured is relieved through bankruptcy of an obligation to pay a liability claim, the plaintiff
becomes an unsecured creditor of the insurer.
If the insured is relieved through bankruptcy of an obligation to pay a liability claim, the insurer
is still obligated to pay the loss.
If the insured is relieved through bankruptcy of an obligation to pay a liability claim, the claim is
then sent to binding arbitration for settlement.
If the insured is relieved through bankruptcy of an obligation to pay a liability claim, the insurer
is also relieved of any obligation to pay the loss.
Answer:
B
,Question 3:
Lime Green Paper Company owns three cars and a pickup truck. Lime Green's sales employees
use their own vehicles for business. Lime Green is insured under a Business Auto Coverage
Form (BACF) form with
symbol 1—Any Auto for liability coverage and symbol 2—Owned Autos Only for physical
damage and medical payments coverages. One of Lime Green's employees caused an accident
while driving his own car on company business, damaging another auto and injuring the driver
and two passengers. Lime Green's employee was injured in the accident, and his car was
damaged.Which one of the following correctly indicates the coverage that Lime Green's BACF
provides for this loss?Liability coverage for the damage to the other auto and injuries to the
other driver and passengers Physical damage coverage for Lime Green's employee's carMedical
payments coverage for Lime Green's employee Physical damage coverage for damage to
Answer:
AEXPLANATION:Symbol 1 provides liability coverage for the use of any auto, including autos
owned by employees;Symbol 2 does not apply because Lime Green does not own the
auto.symbol 1—Any Auto for liability coverage and symbol 2—Owned Autos Only for physical
damage and medical payments coverages. One of Lime Green's employees caused an accident
while driving his own car on company business, damaging another auto and injuring the driver
and two passengers. Lime Green's employee was injured in the accident, and his car was
damaged.Which one of the following correctly indicates the coverage that Lime Green's BACF
provides for this loss?Liability coverage for the damage to the other auto and injuries to the
other driver and passengers Physical damage coverage for Lime Green's employee's carMedical
payments coverage for Lime Green's employee Physical damage coverage for damage to
AEXPLANATION:Symbol 1 provides liability coverage for the use of any auto, including autos
owned by employees;Symbol 2 does not apply because Lime Green does not own the auto.
symbol 1—Any Auto for liability coverage and symbol 2—Owned Autos Only for physical
damage and medical payments coverages. One of Lime Green's employees caused an accident
while driving his own car on company business, damaging another auto and injuring the driver
and two passengers. Lime Green's employee was injured in the accident, and his car was
damaged.Which one of the following correctly indicates the coverage that Lime Green's BACF
provides for this loss?
Liability coverage for the damage to the other auto and injuries to the other driver and
passengers Physical damage coverage for Lime Green's employee's car
Medical payments coverage for Lime Green's employee Physical damage coverage for damage
to
A
EXPLANATION:Symbol 1 provides liability coverage for the use of any auto, including autos
owned by employees;
Symbol 2 does not apply because Lime Green does not own the auto.
symbol 1—Any Auto for liability coverage and symbol 2—Owned Autos Only for physical
damage and medical payments coverages. One of Lime Green's employees caused an accident
while driving his own car on company business, damaging another auto and injuring the driver
and two passengers. Lime Green's employee was injured in the accident, and his car was
damaged.Which one of the following correctly indicates the coverage that Lime Green's BACF
provides for this loss?
Liability coverage for the damage to the other auto and injuries to the other driver and
passengers Physical damage coverage for Lime Green's employee's car
Medical payments coverage for Lime Green's employee Physical damage coverage for damage
to
A
EXPLANATION:Symbol 1 provides liability coverage for the use of any auto, including autos
, Question 4:
A named insured's employee rents an auto while on a business trip and is involved in an
accident. Which one of the following symbols on the business auto policy would provide
coverage for the named insured? Symbol 5—Owned Autos Subject to No-Fault
Symbol 7—Specifically Described Autos Symbol 8—Hired Autos Only
Symbol 9—NonOwned Autos Only
Answer:
D
Question 5:
Which one of the following symbols used in the Business Auto Coverage Form (BACF) is
correctly described?
Symbol 1—Owned Autos Only
Symbol 2—Owned Private Passenger Autos Only Symbol 7—Hired Autos Only
Symbol 9—Nonowned Autos Only
Answer:
D EXPLANATION:
Symbol 9 covers Non-owned autos only; Symbol 1 applies to any auto; Symbol 2 applies to any
owned auto, and Symbol 7 applies to specifically described autos.
Question 6:
Bilo Manufacturing is weighing whether to lease vehicles for its employees or have them drive
their own autos while on company business. Which one of the following exposures is created if
Bilo decides in favor of employee-owned autos?
Answer:
D
Question 7:
In the liability coverage agreement of the Business Auto Coverage Form (BACF), the insurer
expresses its three distinct duties. Which one of the following identifies one of those duties?
A duty to insure all vehicles owned by the named insured A duty to pay covered pollution cost
A duty to comply with laws and regulations A duty to renew the policy
Answer:
B
Answers
Question 1:
$35,000. Each party selected an appraiser, and the two appraisers chose an umpire. The
insured's appraiser came up with a value of $30,000, while the insurer's appraiser came up with
a value of $24,000. The umpire agreed with the insured's appraiser. The fee for the insured's
appraiser was $750, the insurer's appraiser was $950, and the umpire was $600. The total cost
to the insurance company for this loss is:
$30,000.
$30,950.
$31,250.
$31,550
Answer:
C EXPLANATION:
The total cost to the insurance company for this loss is $31,250. The insurance company will
pay for the amount of loss agreed to by two of the three appraisers, the fee for its own
appraiser, and half of the cost for the umpire.
Question 2:
One of the conditions found in the Business Auto Coverage Form addresses the bankruptcy or
insolvency of the named insured. Which one of the following statements about claims
settlement in the event of bankruptcy of the insured is most accurate?
If the insured is relieved through bankruptcy of an obligation to pay a liability claim, the plaintiff
becomes an unsecured creditor of the insurer.
If the insured is relieved through bankruptcy of an obligation to pay a liability claim, the insurer
is still obligated to pay the loss.
If the insured is relieved through bankruptcy of an obligation to pay a liability claim, the claim is
then sent to binding arbitration for settlement.
If the insured is relieved through bankruptcy of an obligation to pay a liability claim, the insurer
is also relieved of any obligation to pay the loss.
Answer:
B
,Question 3:
Lime Green Paper Company owns three cars and a pickup truck. Lime Green's sales employees
use their own vehicles for business. Lime Green is insured under a Business Auto Coverage
Form (BACF) form with
symbol 1—Any Auto for liability coverage and symbol 2—Owned Autos Only for physical
damage and medical payments coverages. One of Lime Green's employees caused an accident
while driving his own car on company business, damaging another auto and injuring the driver
and two passengers. Lime Green's employee was injured in the accident, and his car was
damaged.Which one of the following correctly indicates the coverage that Lime Green's BACF
provides for this loss?Liability coverage for the damage to the other auto and injuries to the
other driver and passengers Physical damage coverage for Lime Green's employee's carMedical
payments coverage for Lime Green's employee Physical damage coverage for damage to
Answer:
AEXPLANATION:Symbol 1 provides liability coverage for the use of any auto, including autos
owned by employees;Symbol 2 does not apply because Lime Green does not own the
auto.symbol 1—Any Auto for liability coverage and symbol 2—Owned Autos Only for physical
damage and medical payments coverages. One of Lime Green's employees caused an accident
while driving his own car on company business, damaging another auto and injuring the driver
and two passengers. Lime Green's employee was injured in the accident, and his car was
damaged.Which one of the following correctly indicates the coverage that Lime Green's BACF
provides for this loss?Liability coverage for the damage to the other auto and injuries to the
other driver and passengers Physical damage coverage for Lime Green's employee's carMedical
payments coverage for Lime Green's employee Physical damage coverage for damage to
AEXPLANATION:Symbol 1 provides liability coverage for the use of any auto, including autos
owned by employees;Symbol 2 does not apply because Lime Green does not own the auto.
symbol 1—Any Auto for liability coverage and symbol 2—Owned Autos Only for physical
damage and medical payments coverages. One of Lime Green's employees caused an accident
while driving his own car on company business, damaging another auto and injuring the driver
and two passengers. Lime Green's employee was injured in the accident, and his car was
damaged.Which one of the following correctly indicates the coverage that Lime Green's BACF
provides for this loss?
Liability coverage for the damage to the other auto and injuries to the other driver and
passengers Physical damage coverage for Lime Green's employee's car
Medical payments coverage for Lime Green's employee Physical damage coverage for damage
to
A
EXPLANATION:Symbol 1 provides liability coverage for the use of any auto, including autos
owned by employees;
Symbol 2 does not apply because Lime Green does not own the auto.
symbol 1—Any Auto for liability coverage and symbol 2—Owned Autos Only for physical
damage and medical payments coverages. One of Lime Green's employees caused an accident
while driving his own car on company business, damaging another auto and injuring the driver
and two passengers. Lime Green's employee was injured in the accident, and his car was
damaged.Which one of the following correctly indicates the coverage that Lime Green's BACF
provides for this loss?
Liability coverage for the damage to the other auto and injuries to the other driver and
passengers Physical damage coverage for Lime Green's employee's car
Medical payments coverage for Lime Green's employee Physical damage coverage for damage
to
A
EXPLANATION:Symbol 1 provides liability coverage for the use of any auto, including autos
, Question 4:
A named insured's employee rents an auto while on a business trip and is involved in an
accident. Which one of the following symbols on the business auto policy would provide
coverage for the named insured? Symbol 5—Owned Autos Subject to No-Fault
Symbol 7—Specifically Described Autos Symbol 8—Hired Autos Only
Symbol 9—NonOwned Autos Only
Answer:
D
Question 5:
Which one of the following symbols used in the Business Auto Coverage Form (BACF) is
correctly described?
Symbol 1—Owned Autos Only
Symbol 2—Owned Private Passenger Autos Only Symbol 7—Hired Autos Only
Symbol 9—Nonowned Autos Only
Answer:
D EXPLANATION:
Symbol 9 covers Non-owned autos only; Symbol 1 applies to any auto; Symbol 2 applies to any
owned auto, and Symbol 7 applies to specifically described autos.
Question 6:
Bilo Manufacturing is weighing whether to lease vehicles for its employees or have them drive
their own autos while on company business. Which one of the following exposures is created if
Bilo decides in favor of employee-owned autos?
Answer:
D
Question 7:
In the liability coverage agreement of the Business Auto Coverage Form (BACF), the insurer
expresses its three distinct duties. Which one of the following identifies one of those duties?
A duty to insure all vehicles owned by the named insured A duty to pay covered pollution cost
A duty to comply with laws and regulations A duty to renew the policy
Answer:
B
