Auto Insurance Concepts Quiz

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Questions and Answers

What is the purpose of concurrent policies in insurance?

To ensure policy terms align and prevent coverage gaps. (correct)

To provide coverage for lower premiums.

To simplify claims processing.

To increase the amount paid out by insurance.

What might lead to a denial of coverage by an insurance company?

The insurance company is going out of business.

The policyholder did not make a claim in the past year.

The claimant is seeking too little compensation.

The claim exceeds the policy limits. (correct)

What are damages intended to achieve in personal injury cases?

To punish the defendant.

To restore the injured party to their prior position as much as possible. (correct)

To make the injuring party financially stable.

To cover the defendant's legal fees.

What does a deductible refer to in an insurance policy?

The amount the claimant pays out of pocket before insurance applies. Signup and view all the answers

What is the implication of denied liability in an insurance context?

A disagreement exists over who is responsible for damages. Signup and view all the answers

Which type of damages includes monetary compensation for loss or harm?

Compensatory Damages. Signup and view all the answers

What is the role of the defendant in a civil lawsuit?

To be the party being sued or accused. Signup and view all the answers

What is the primary function of Preferred Body Shops in relation to insurance companies?

They are part of an insurer’s Direct Repair Program network. Signup and view all the answers

What compensation is restricted under California's Prop 213 for uninsured drivers involved in accidents?

Non-economic damages like pain and suffering. Signup and view all the answers

What is a Property Damage Release?

A legal document where a person settles their claim for property damage. Signup and view all the answers

What does 'Replacement Cost' refer to in the context of property damage?

The cost to replace damaged property with similar items at current prices. Signup and view all the answers

In a red light dispute, what typically occurs between the parties involved in an accident?

Each party claims they had the right of way. Signup and view all the answers

What is the primary function of an excess insurance policy?

To increase available coverage after primary policy limits are exhausted Signup and view all the answers

What needs to be the minimum auto limits for qualifying for an umbrella policy?

100/300-250/500 Signup and view all the answers

What is the consequence of driving if you are listed as an excluded driver on an insurance policy?

The policyholder assumes all costs for any resulting damages Signup and view all the answers

What typically characterizes a low-speed collision?

It often happens in parking lots or neighborhoods. Signup and view all the answers

Which scenario might lead to the failure to comply with policy terms?

Reporting an incident after the required deadline Signup and view all the answers

What is the primary role of a MAIT report?

To investigate severe or complex traffic accidents. Signup and view all the answers

What is the main purpose of gap insurance?

To bridge the difference between a car loan and its market value Signup and view all the answers

In the context of vehicle accidents, what is an example of negligence?

Failing to signal when changing lanes. Signup and view all the answers

What does the 'Friendly Body Shop' refer to?

An auto repair shop approved by a law firm for client repairs Signup and view all the answers

What key aspect does an excess policy exclude?

Types of coverage expansion Signup and view all the answers

What happens in a merge collision?

A vehicle attempts to merge and collides with another vehicle. Signup and view all the answers

In an exchange of information after a collision, which detail is typically not shared?

Previous accident history Signup and view all the answers

What is a common cause of a multi-vehicle pile-up?

Chain-reaction crashes in bad weather. Signup and view all the answers

Which of the following statements is true regarding excess insurance policies?

They serve as an additional financial safety net beyond existing policies. Signup and view all the answers

What defines misrepresentation in the insurance context?

Providing false or misleading information. Signup and view all the answers

What does the legal doctrine of 'entrustment' imply?

Liability for lending items to negligent individuals. Signup and view all the answers

What typically triggers the involvement of a MAIT team?

Severe or complex accidents requiring in-depth analysis. Signup and view all the answers

Which scenario does NOT generally lead to a loss of use claim?

A vehicle provided for free by a friend. Signup and view all the answers

What is a primary goal of accident reconstruction teams?

To identify causative factors of accidents. Signup and view all the answers

What principle may hold a car owner liable if they lend their vehicle to someone who causes an accident while intoxicated?

Negligent entrustment Signup and view all the answers

Which of the following is NOT an example of non-economic damages?

Medical expenses Signup and view all the answers

What does the term 'notice of loss' refer to in the context of insurance?

The initial report to an insurance company about a loss Signup and view all the answers

What does 'objective' mean in a legal context?

Fact-based and uninfluenced by personal feelings Signup and view all the answers

Which statement about OEM parts is true?

They are identical to original parts and usually higher in cost. Signup and view all the answers

Which type of insurance policy is characterized by having no fixed payout limit for personal injury claims?

No-limit liability policy Signup and view all the answers

Which aspect of non-economic damages is primarily addressed?

Emotional and psychological impact of an injury Signup and view all the answers

What does a property owner or occupier need to demonstrate regarding hazardous conditions?

They must have known or should have known about the condition. Signup and view all the answers

Which of the following best defines negligent entrustment?

The act of lending a vehicle to an unfit driver. Signup and view all the answers

Which type of damage compensates a plaintiff for physical impairment and emotional suffering?

Non-economic damages Signup and view all the answers

Study Notes

Actual Cash Value (ACV)

Value of damaged property at time of loss, accounting for depreciation.

After Market Parts

Replacement parts, not from original manufacturer (OEM).
Can be more affordable or customized.
Quality may vary depending on manufacturer.

Appraisal

Evaluation of property's value, often for insurance or repair costs.

Arbitration

Alternative to trial, where a neutral third party decides the case.

Auto Policy

Contract between policyholder and insurance company for vehicle protection.
Covers accidents, theft, and other incidents.
Includes costs for bodily injury, property damage, vehicle repairs, and legal liabilities.
Policyholder pays a premium for coverage.

Backing-up Collision

Collision when a vehicle reverses and impacts another vehicle, pedestrian, or object.

Blind Spot Collision

Collision between vehicles where one is in a blind spot during a lane change.

Burning Policy

Liability coverage with decreasing limits as defense costs and claims are paid.
Coverage limits decrease with each payment to adjust for legal fees, settlements, or judgments.

Catastrophic Injury

Severe injuries leading to permanent disability, like brain or spinal damage.

Causation Disputes

Disagreements over whether an accident caused claimed injuries.

Chain-Reaction Collision

Multi-vehicle collision caused by an initial impact that leads to subsequent collisions.

Claim

Demand for compensation for injury or loss.

Claimant

Individual filing a claim for property or personal damages.

Collision Coverage

Insurance that covers vehicle repair or replacement from a collision.

Combined Single Limits (CSL)

Insurance policy limit for all claims from a single incident.
Applies to bodily injury and property damage liabilities together.

Commercial Policy

Insurance contract for businesses, protecting against financial losses.
High policy limits (Often 500k+)

Comparative Negligence

Adjusting damages based on each party's fault.

Comprehensive Coverage

Insurance for non-collision damages, like theft, vandalism, or natural disasters.

Concurrent Policy

Multiple insurance policies covering the same property, person, or risk.
Policies designed to seamlessly cover a single loss or incident to avoid coverage gaps.

Coverage Limitations

Cases where a claim exceeds policy limits.
Certain damage types (like flood or earthquake) may not be covered.

Damages (Non-Economic & Economic)

Monetary compensation in lawsuits for loss, injury, or harm.
Economic damages cover out-of-pocket expenses, lost income,
Non-economic damages address the intangible impact of an injury (pain, suffering).

Deductible

Amount the claimant must pay before insurance is activated.

Defendant (At-Fault Party)

Person being sued or accused.

Denied Coverage (or Denial)

Insurance company refusal to pay a claim.

Denied Liability

Refusal by a party or their insurer to accept responsibility for an incident, accident, or injury.

Depreciation

Reduction in value of property due to age, wear, or damage.

Diminished Value

Decrease in a vehicle's value after damage and repair.

Disputed Liability

Disagreements over responsibility or fault in an accident, injury, or damage.
Leads to delay in settlements or legal action for resolution.

Economic Damages

Compensation for quantifiable financial losses from an injury.
Includes medical expenses, lost wages, and property damage.

Establishing Liability

Process of proving a party is legally responsible for causing harm.

Estimate or Repair Estimate

Projected cost for repairs.

Excess Policy

Insurance supplementing a primary policy when the primary policy's limits are exhausted.

Exchange of Information

Direct sharing of details after a traffic collision.
Avoids formal traffic collision reports under certain conditions.

Excluded Driver

Person specifically excluded from vehicle insurance coverage.

Failure to Comply with Policy Terms -

Policyholder failure to comply with policy terms (e.g. reporting requirements).

Friendly Body Shop

Approved repair shop for clients of a legal firm.

Gap Insurance (Guaranteed Asset Protection Insurance)

Covers the difference between a vehicle's loan value and insurance payout in case of total loss.

Government Claim

Request for compensation to a government entity due to negligence/action/policy.

Government Entity/Immunity

Any Federal, State or Local government organization.
Protects agencies from lawsuits over actions. Certain circumstances waive immunity.

Head-On Collision

Front-to-front collision between vehicles.

Hit-and-Run

Accident where one party leaves the scene without providing information or help.

Intersection Collision

Collision at an intersection due to improper turns, yielding failures or running red lights.

Lapsed Policy

Inactive policy due to non-payment or expiration.

Liability (Why a person is at fault)

Legal responsibility for one's actions, or lack of action.

Liability Insurance

Protection against claims.

Loss of Use (LOU)

Coverage for non-use of vehicle due to repair/damage.

Low-Speed Collision

Collision at speeds under 10-15 mph, often in parking lots or neighborhoods.

MAIT Report (Multidisciplinary Accident Investigation Team)

In-depth analysis of significant traffic collisions.

Merge Collision

Collision that happens when one vehicle attempts to merge into traffic.

Misrepresentation or Fraud

Providing false or misleading data in application/claims processes.

Multi-Vehicle Pile-Up

Series of collisions involving multiple vehicles.

Negligence

Failure to take appropriate care to avoid causing injury, resulting in damage.

Negligence Entrustment

Holding one party responsible for providing a dangerous item to another, knowing their unsuitability to use it.

Non-Economic Damages

Compensation for intangible losses, like pain, suffering, emotional loss, and loss of quality of life.

Notice of Loss

Initial report of loss to an insurance company.

Objective

Unbiased perspective; focused on facts, not personal emotions.

OEM (Original Equipment Manufacturer)

Original parts manufacturer.

Open Policy

Insurance policy without pre-set payout limits, based solely on damage incurred.

Overturn Liability

The process of re-evaluating liability ruling within a legal case.

Pain and Suffering

Physical and emotional distress caused by injury.

Parking Lot Accident

Accident in a parking lot, often due to low speeds or vehicle maneuvers.

Party

Involved individual, organization, or entity in a legal proceeding.

Personal Injury

Harm to a person's body, mind, or emotions.

Plaintiff (Our Client)

Person filing a lawsuit against another party.

Policy Coverage Dispute

Differences or disagreements regarding policy coverage and claims.

Policy Exclusions

Specific risks or damages excluded from coverage.

Policy Language

Specific wording, terms, conditions, rights, responsibilities, exclusions within an insurance policy.

Policy Limits (Coverages)

Maximum amount an insurer will pay for a covered loss.

Preferred Body Shop

Repair shops selected by insurance companies for claims' direct repairs.

Prop 213

California law limiting compensation for personal injury cases involving uninsured drivers.

Property Damage

Harm to physical property.

Property Damage Release

Legal document releasing claims in exchange for property damage settlements.

Rear-end Collision

Collision where one vehicle strikes the rear of another.

Red Light Dispute

Disagreement over whether a traffic signal was obeyed before a collision.

Replacement Cost

Cost to replace damaged property without depreciation considerations.

Rollover Accident

Accident where a vehicle flips onto its side/roof.

Salvage Value

Value of a vehicle deemed a total loss for parts.

Settlement (Property Damage)

Agreement amount upon payment by insurer for property damage.

Sideswipe

Collision where two parallel vehicles collide on the side.

Soft Tissue Injury

Damage to soft tissues like muscles, ligaments, or tendons.

Statement of Facts

Summary of important events, circumstances, or aspects surrounding a case.

Statute of Limitations

Time limit allowed to file a lawsuit following an injury.

Structural Damage

Damage to a structure's foundation or supporting parts.

Subjective

Based on personal emotions or opinions, not facts.

Subrogation

Insurance company's claim for reimbursement from another party.

T-bone Collision

Collision where the front of one vehicle crashes to the side of another (forming a T).

Tender of Claim (To another party)

Formally requesting responsibility of a claim from another party.

Tender Policy Limit

Presenting the insurance company's maximum payout figure to resolve the demand.

Third-Party Claim (3P)

Claim filed against another party's insurance for your damages.

Total Loss

Total repair costs exceed the vehicle's actual cash value.

Towing

Transportation service of damaged vehicles.

Traumatic Brain Injury

Serious brain injury resulting from an impact.

U-Turn Collision

Collision involving a vehicle making a U-turn and colliding with another.

Undercarriage Damage

Damage to the underside of a vehicle.

Underinsured Motorist (UIM)

Coverage activates when another driver has lower liability limits.

Uninsured Motorist (UM)

Coverage activates when the opposite driver does not have insurance.

Vehicle Inspection

Evaluation process of the vehicle's condition.

Vicarious Liability

Holding one party responsible for another's actions.

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Description

Test your knowledge on key terms and concepts in auto insurance, including Actual Cash Value, appraisal processes, and collision types. This quiz covers aspects of policies, aftermarket parts, and alternative dispute resolutions. Perfect for anyone looking to understand the fundamentals of auto insurance.