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CPCU - EXAM 5 (PERSONAL INSURANCE AND
FINANCIAL PLANNING) 2026/2027 | INSURANCE
CERTIFICATION | 50 VERIFIED Q&A | DETAILED
RATIONALES | PASS GUARANTEED – A+ GRADED
Section 1: Personal Auto Insurance and Financial Responsibility (Q1–Q12)
1. The Personal Auto Policy (PAP) Part A – Liability Coverage provides:
A. Medical payments for the insured
B. Bodily injury and property damage liability to others
C. Physical damage to the insured auto
D. Uninsured motorist coverage
Correct Answer: B
Rationale: Part A covers the insured’s legal liability for bodily injury and property damage to others.
Part B is medical payments; Part C is uninsured motorist; Part D is coverage for damage to your auto.
2. Under the PAP, “split limits” of 25/50/25 mean:
A. $25,000 per person, $50,000 per occurrence, and $25,000 property damage
B. $25,000 per person, $50,000 per occurrence, and $25,000 medical payments
C. $25,000 per accident, $50,000 per person, and $25,000 property damage
D. $25,000 each for bodily injury, property damage, and collision
Correct Answer: A
Rationale: Split limits are expressed as bodily injury per person / bodily injury per occurrence /
property damage per occurrence. 25/50/25 means $25,000 per person, $50,000 per accident for BI,
and $25,000 for PD.
3. Part B – Medical Payments coverage under the PAP pays:
A. Only for the named insured
B. For reasonable medical expenses incurred by the insured and passengers, regardless of fault
C. Only for injuries caused by an uninsured driver
D. For property damage to the insured auto
Correct Answer: B
Rationale: MedPay covers reasonable and necessary medical expenses for the insured and
passengers, regardless of fault, up to the limit. It is not fault-based and does not cover property
damage.
4. Part C – Uninsured Motorists coverage responds when:
A. The insured is at fault in an accident
B. An uninsured or hit-and-run driver causes bodily injury to the insured
C. The insured’s auto is damaged by fire
D. The insured needs a rental car
Correct Answer: B
Rationale: UM covers bodily injury caused by an uninsured, underinsured, or hit-and-run motorist. It
does not respond to at-fault accidents, fire damage, or rental reimbursement.
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5. Part D – Coverage for Damage to Your Auto includes:
A. Collision and other-than-collision (comprehensive) coverage
B. Liability coverage
C. Medical payments
D. Uninsured motorist coverage
Correct Answer: A
Rationale: Part D provides physical damage coverage: collision (impact with another object/vehicle)
and other-than-collision (comprehensive) for theft, fire, hail, etc. It does not include liability,
MedPay, or UM.
6. A PAP “non-owned auto” provision extends liability coverage to:
A. Any vehicle the insured borrows or rents for personal use
B. Vehicles the insured owns but does not insure
C. Racing vehicles
D. Vehicles used for livery purposes
Correct Answer: A
Rationale: The PAP covers the insured’s use of non-owned autos (borrowed or rented) for personal
use, subject to policy terms. It does not cover owned-but-uninsured vehicles, racing vehicles, or
livery exposures.
7. Which of the following is typically excluded under the PAP?
A. Use of a vehicle for ride-sharing or delivery services
B. Personal errands
C. Commuting to work
D. Vacation travel
Correct Answer: A
Rationale: The PAP generally excludes use of a vehicle for livery, ride-sharing, or delivery services
unless endorsed. Personal errands, commuting, and vacation travel are covered personal uses.
8. Financial responsibility laws require drivers to:
A. Carry proof of ability to pay for damages caused by an auto accident
B. Maintain collision coverage at all times
C. Purchase life insurance
D. Carry medical payments coverage only
Correct Answer: A
Rationale: Financial responsibility laws require proof of ability to pay for auto accident damages,
often through liability insurance, bonds, or deposits. They do not mandate collision, life, or MedPay
coverage.
9. A PAP “named non-owner” policy is appropriate for:
A. A person who owns multiple vehicles
B. A person who does not own an auto but regularly rents or borrows vehicles
C. A commercial fleet owner
D. A person who only uses public transportation
Correct Answer: B
Rationale: A named non-owner policy provides liability and related coverage for individuals who do
not own an auto but drive borrowed or rented vehicles. It is not for multi-vehicle owners or
commercial fleets.
CPCU - EXAM 5 (PERSONAL INSURANCE AND
FINANCIAL PLANNING) 2026/2027 | INSURANCE
CERTIFICATION | 50 VERIFIED Q&A | DETAILED
RATIONALES | PASS GUARANTEED – A+ GRADED
Section 1: Personal Auto Insurance and Financial Responsibility (Q1–Q12)
1. The Personal Auto Policy (PAP) Part A – Liability Coverage provides:
A. Medical payments for the insured
B. Bodily injury and property damage liability to others
C. Physical damage to the insured auto
D. Uninsured motorist coverage
Correct Answer: B
Rationale: Part A covers the insured’s legal liability for bodily injury and property damage to others.
Part B is medical payments; Part C is uninsured motorist; Part D is coverage for damage to your auto.
2. Under the PAP, “split limits” of 25/50/25 mean:
A. $25,000 per person, $50,000 per occurrence, and $25,000 property damage
B. $25,000 per person, $50,000 per occurrence, and $25,000 medical payments
C. $25,000 per accident, $50,000 per person, and $25,000 property damage
D. $25,000 each for bodily injury, property damage, and collision
Correct Answer: A
Rationale: Split limits are expressed as bodily injury per person / bodily injury per occurrence /
property damage per occurrence. 25/50/25 means $25,000 per person, $50,000 per accident for BI,
and $25,000 for PD.
3. Part B – Medical Payments coverage under the PAP pays:
A. Only for the named insured
B. For reasonable medical expenses incurred by the insured and passengers, regardless of fault
C. Only for injuries caused by an uninsured driver
D. For property damage to the insured auto
Correct Answer: B
Rationale: MedPay covers reasonable and necessary medical expenses for the insured and
passengers, regardless of fault, up to the limit. It is not fault-based and does not cover property
damage.
4. Part C – Uninsured Motorists coverage responds when:
A. The insured is at fault in an accident
B. An uninsured or hit-and-run driver causes bodily injury to the insured
C. The insured’s auto is damaged by fire
D. The insured needs a rental car
Correct Answer: B
Rationale: UM covers bodily injury caused by an uninsured, underinsured, or hit-and-run motorist. It
does not respond to at-fault accidents, fire damage, or rental reimbursement.
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5. Part D – Coverage for Damage to Your Auto includes:
A. Collision and other-than-collision (comprehensive) coverage
B. Liability coverage
C. Medical payments
D. Uninsured motorist coverage
Correct Answer: A
Rationale: Part D provides physical damage coverage: collision (impact with another object/vehicle)
and other-than-collision (comprehensive) for theft, fire, hail, etc. It does not include liability,
MedPay, or UM.
6. A PAP “non-owned auto” provision extends liability coverage to:
A. Any vehicle the insured borrows or rents for personal use
B. Vehicles the insured owns but does not insure
C. Racing vehicles
D. Vehicles used for livery purposes
Correct Answer: A
Rationale: The PAP covers the insured’s use of non-owned autos (borrowed or rented) for personal
use, subject to policy terms. It does not cover owned-but-uninsured vehicles, racing vehicles, or
livery exposures.
7. Which of the following is typically excluded under the PAP?
A. Use of a vehicle for ride-sharing or delivery services
B. Personal errands
C. Commuting to work
D. Vacation travel
Correct Answer: A
Rationale: The PAP generally excludes use of a vehicle for livery, ride-sharing, or delivery services
unless endorsed. Personal errands, commuting, and vacation travel are covered personal uses.
8. Financial responsibility laws require drivers to:
A. Carry proof of ability to pay for damages caused by an auto accident
B. Maintain collision coverage at all times
C. Purchase life insurance
D. Carry medical payments coverage only
Correct Answer: A
Rationale: Financial responsibility laws require proof of ability to pay for auto accident damages,
often through liability insurance, bonds, or deposits. They do not mandate collision, life, or MedPay
coverage.
9. A PAP “named non-owner” policy is appropriate for:
A. A person who owns multiple vehicles
B. A person who does not own an auto but regularly rents or borrows vehicles
C. A commercial fleet owner
D. A person who only uses public transportation
Correct Answer: B
Rationale: A named non-owner policy provides liability and related coverage for individuals who do
not own an auto but drive borrowed or rented vehicles. It is not for multi-vehicle owners or
commercial fleets.
