AU 62 Chapter 5 - Underwriting Auto Dealers Exam
Questions and Answers with Verified Solutions |
Latest 2026 Update
Q: Garagekeepers direct coverage
Answer:
A coverage option that changes garagekeepers coverage from a legal
liability basis to a direct coverage basis.
Even if the insured is not legally liable, they may choose this coverage to preserve
customer loyalty and
goodwill.
Q: Franchised dealer
Answer:
An auto dealer that is authorized by one or more auto manufacturers to sell their
autos under the manufacturers' names and trademarks.
Q: Nonfranchised dealer
Answer:
An auto dealer that does not represent a particular manufacturer. Normally a
used car dealer.
Q: Building
Answer:
A classification of auto storage for dealerships; includes display rooms, service areas, and
other enclosed areas of buildings that are locked when unattended.
,Q: Nonstandard open lot
Answer:
A classification of auto storage for dealerships including all other open lot
parking locations other than those defined as standard open lots or unroofed space and
buildings not
securely enclosed and locked when unattended.
Q: Rating Unit
Answer:
A measure of loss exposure used in garage liability pricing determined by multiplying the
class of operators by the number of persons in the class.
Q: Standard open lot
Answer:
A classification of auto storage for dealerships; parking enclosed by at least six-foot-
high fencing with openings locked when unattended.
Q: Auto Dealers Coverage Form (ADCF)
Answer:
Used to insure Franchised and Non-Franchised Auto dealers.
Includes these main sections:
Q: Section I
Answer:
Covered Autos Coverages
,Q: Section II
Answer:
General Liability Coverages
Q: Section III
Answer:
Acts, Errors or Omissions Liability Coverages
Q: Section IV
Answer:
Conditions
Q: Section V
Answer:
Definitions
Q: Which one of these is the typical rating unit for auto dealers liability coverage?
Answer:
The rating unit
represents a person or part of a person because loss experience varies with the extent to
which dealers
permit employees and family members to use dealer autos.
, Q: Which one of the following statements is true regarding the Auto Dealers Coverage
Form (ADCF) developed by Insurance Services Office, Inc. (ISO)?
Answer:
The Liability Coverage section provides both general
liability coverage and auto liability coverage.
Q: It is used exclusively with auto and trailer dealers. It covers dealers's liability
exposures and also provides garagekeepers covers, which insures against loss to
customers' autos while they are in the insured's care, custody or control.
Additionally, it provides physical damage coverage for autos owned or held for sale
by dealers.
Answer:
Q: Auto dealers are classified based on whether they are franchised or nonfranchised.
The classification also depends on which one of the following?
Answer:
The auto dealer classification also depends on the type of
vehicles sold.
Q: Which one of the following statements is true regarding auto dealers coverage and
the underwriting of garage coverage?
Answer:
Customer use of owned autos is a normal exposure for dealers and that exposure is
difficult to underwrite.
Questions and Answers with Verified Solutions |
Latest 2026 Update
Q: Garagekeepers direct coverage
Answer:
A coverage option that changes garagekeepers coverage from a legal
liability basis to a direct coverage basis.
Even if the insured is not legally liable, they may choose this coverage to preserve
customer loyalty and
goodwill.
Q: Franchised dealer
Answer:
An auto dealer that is authorized by one or more auto manufacturers to sell their
autos under the manufacturers' names and trademarks.
Q: Nonfranchised dealer
Answer:
An auto dealer that does not represent a particular manufacturer. Normally a
used car dealer.
Q: Building
Answer:
A classification of auto storage for dealerships; includes display rooms, service areas, and
other enclosed areas of buildings that are locked when unattended.
,Q: Nonstandard open lot
Answer:
A classification of auto storage for dealerships including all other open lot
parking locations other than those defined as standard open lots or unroofed space and
buildings not
securely enclosed and locked when unattended.
Q: Rating Unit
Answer:
A measure of loss exposure used in garage liability pricing determined by multiplying the
class of operators by the number of persons in the class.
Q: Standard open lot
Answer:
A classification of auto storage for dealerships; parking enclosed by at least six-foot-
high fencing with openings locked when unattended.
Q: Auto Dealers Coverage Form (ADCF)
Answer:
Used to insure Franchised and Non-Franchised Auto dealers.
Includes these main sections:
Q: Section I
Answer:
Covered Autos Coverages
,Q: Section II
Answer:
General Liability Coverages
Q: Section III
Answer:
Acts, Errors or Omissions Liability Coverages
Q: Section IV
Answer:
Conditions
Q: Section V
Answer:
Definitions
Q: Which one of these is the typical rating unit for auto dealers liability coverage?
Answer:
The rating unit
represents a person or part of a person because loss experience varies with the extent to
which dealers
permit employees and family members to use dealer autos.
, Q: Which one of the following statements is true regarding the Auto Dealers Coverage
Form (ADCF) developed by Insurance Services Office, Inc. (ISO)?
Answer:
The Liability Coverage section provides both general
liability coverage and auto liability coverage.
Q: It is used exclusively with auto and trailer dealers. It covers dealers's liability
exposures and also provides garagekeepers covers, which insures against loss to
customers' autos while they are in the insured's care, custody or control.
Additionally, it provides physical damage coverage for autos owned or held for sale
by dealers.
Answer:
Q: Auto dealers are classified based on whether they are franchised or nonfranchised.
The classification also depends on which one of the following?
Answer:
The auto dealer classification also depends on the type of
vehicles sold.
Q: Which one of the following statements is true regarding auto dealers coverage and
the underwriting of garage coverage?
Answer:
Customer use of owned autos is a normal exposure for dealers and that exposure is
difficult to underwrite.
