Chapter 21 RSM Exam | Questions with 100%
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Terms in this set (75)
Approaches for compensating auto States use several different legal and insurance-
accident victims based approaches to compensate people injured
in auto accidents because many victims cannot
fully recover damages from negligent drivers,
especially when the at-fault driver is uninsured or
underinsured. These approaches include financial
responsibility laws, compulsory insurance laws,
unsatisfied judgment funds, uninsured motorists
coverage, low-cost auto insurance, no pay no play
laws, no-fault insurance, and residual market
mechanisms. :contentReference[oaicite:1]{index=1}
Why many auto accident victims Many accident victims are unable to recover
cannot recover damages damages because the negligent driver may be
uninsured or underinsured, meaning the driver
either has no insurance at all or carries liability
limits too low to fully pay for the injured party's
losses. :contentReference[oaicite:2]{index=2}
, Financial responsibility law A financial responsibility law requires motorists to
furnish proof that they can pay for damages up to
specified minimum dollar limits. Its purpose is to
provide some protection to the public from
irresponsible drivers by requiring evidence of
financial responsibility. :contentReference[oaicite:3]
{index=3}
How evidence of financial A motorist can show financial responsibility by
responsibility can be provided producing proof of an auto liability insurance
policy with at least the required minimum limits,
posting a bond or depositing the amount required
by law, or proving that he or she qualifies as a self-
insurer. :contentReference[oaicite:4]{index=4}
Limitation of financial responsibility Financial responsibility laws provide only limited
laws protection because they do not guarantee that all
accident victims will be paid, and because the
required minimum liability limits are often relatively
low compared with the size of actual accident
losses. :contentReference[oaicite:5]{index=5}
Compulsory insurance law A compulsory insurance law requires motorists to
carry at least a minimum amount of liability
insurance before a vehicle can be licensed or
registered. Unlike financial responsibility laws,
which focus on proving ability to pay, compulsory
insurance requires coverage in advance.
:contentReference[oaicite:6]{index=6}
Correct Answers | Verified | Latest Update 2026
Save
Terms in this set (75)
Approaches for compensating auto States use several different legal and insurance-
accident victims based approaches to compensate people injured
in auto accidents because many victims cannot
fully recover damages from negligent drivers,
especially when the at-fault driver is uninsured or
underinsured. These approaches include financial
responsibility laws, compulsory insurance laws,
unsatisfied judgment funds, uninsured motorists
coverage, low-cost auto insurance, no pay no play
laws, no-fault insurance, and residual market
mechanisms. :contentReference[oaicite:1]{index=1}
Why many auto accident victims Many accident victims are unable to recover
cannot recover damages damages because the negligent driver may be
uninsured or underinsured, meaning the driver
either has no insurance at all or carries liability
limits too low to fully pay for the injured party's
losses. :contentReference[oaicite:2]{index=2}
, Financial responsibility law A financial responsibility law requires motorists to
furnish proof that they can pay for damages up to
specified minimum dollar limits. Its purpose is to
provide some protection to the public from
irresponsible drivers by requiring evidence of
financial responsibility. :contentReference[oaicite:3]
{index=3}
How evidence of financial A motorist can show financial responsibility by
responsibility can be provided producing proof of an auto liability insurance
policy with at least the required minimum limits,
posting a bond or depositing the amount required
by law, or proving that he or she qualifies as a self-
insurer. :contentReference[oaicite:4]{index=4}
Limitation of financial responsibility Financial responsibility laws provide only limited
laws protection because they do not guarantee that all
accident victims will be paid, and because the
required minimum liability limits are often relatively
low compared with the size of actual accident
losses. :contentReference[oaicite:5]{index=5}
Compulsory insurance law A compulsory insurance law requires motorists to
carry at least a minimum amount of liability
insurance before a vehicle can be licensed or
registered. Unlike financial responsibility laws,
which focus on proving ability to pay, compulsory
insurance requires coverage in advance.
:contentReference[oaicite:6]{index=6}
