FIN 385 PRACTICE PROBLEMS
QUESTIONS AND CORRECT
ANSWERS
Which of the following is a covered person under the medical payments coverage of the PAP?
✅✅ANSW-a family member of the name insured if struck by an auto while crossing the street
John has an auto which is covered for collision losses subject to a $250 deductible. Kate's auto also
has collision coverage but her deductible is $500. Which of the following statements describes how a
$2,000 collision loss will be paid if it occurs when John borrows Kate's car because his car is in the
shop for repairs? ✅✅ANSW-Katie's policy will pay $1500, John's will pay $250
Which of the following statements about personal property (coverage c) of the which of the
following statements about personal property coverage (coverage c) of the homeowners 3 policy is
(are) true.
1. there are specific limits of liability that apply to certain types of personal property
2. the full amount of coverage applies only if the property is permanently located at any residence of
the insured ✅✅ANSW-both 1 and 2
Nancy was injured when she drove her car through a stop sign and was struck by Philip's car. Philip
saw Nancy and could have stopped. However, he failed to do so since he had the right-of-way.
Nancy can recover damages from Philip under which of the following legal doctrines? ✅✅ANSW-
the last clear chance rule
a situation in which a person is held legally liable even though fault or negligence cannot be proven
is an example of ✅✅ANSW-strict liability
The personal umbrella policy covers some personal injuries. which of the following is considered a
personal injury? ✅✅ANSW-Defamation of character
Paul has a personal auto policy with a per-person liability limit of $300,000. He also has a personal
umbrella policy with a limit of $2,000,000 and a self-insured retention of $1,000. How much will be
paid by each policy if a person wins a judgment of $500,000 against Paul as a result of bodily injury
arising from the auto accident? ✅✅ANSW-The auto policy will pay $300,000, and the umbrella
policy will pay $200,000.
QUESTIONS AND CORRECT
ANSWERS
Which of the following is a covered person under the medical payments coverage of the PAP?
✅✅ANSW-a family member of the name insured if struck by an auto while crossing the street
John has an auto which is covered for collision losses subject to a $250 deductible. Kate's auto also
has collision coverage but her deductible is $500. Which of the following statements describes how a
$2,000 collision loss will be paid if it occurs when John borrows Kate's car because his car is in the
shop for repairs? ✅✅ANSW-Katie's policy will pay $1500, John's will pay $250
Which of the following statements about personal property (coverage c) of the which of the
following statements about personal property coverage (coverage c) of the homeowners 3 policy is
(are) true.
1. there are specific limits of liability that apply to certain types of personal property
2. the full amount of coverage applies only if the property is permanently located at any residence of
the insured ✅✅ANSW-both 1 and 2
Nancy was injured when she drove her car through a stop sign and was struck by Philip's car. Philip
saw Nancy and could have stopped. However, he failed to do so since he had the right-of-way.
Nancy can recover damages from Philip under which of the following legal doctrines? ✅✅ANSW-
the last clear chance rule
a situation in which a person is held legally liable even though fault or negligence cannot be proven
is an example of ✅✅ANSW-strict liability
The personal umbrella policy covers some personal injuries. which of the following is considered a
personal injury? ✅✅ANSW-Defamation of character
Paul has a personal auto policy with a per-person liability limit of $300,000. He also has a personal
umbrella policy with a limit of $2,000,000 and a self-insured retention of $1,000. How much will be
paid by each policy if a person wins a judgment of $500,000 against Paul as a result of bodily injury
arising from the auto accident? ✅✅ANSW-The auto policy will pay $300,000, and the umbrella
policy will pay $200,000.
