Limited Lines Automobile Exam 1 Flashcards

Questions and Answers

What course of action does a party to a contract have if the other party is found to be in breach of that contract?

Damages for breach, reasonable attorney fees, and costs.

A representation in an insurance contract qualifies as which of the following?

A condition

An express warranty

An endorsement

An implied warranty (correct)

What does it mean if an agent's insurance license is inactive?

The agent cannot transact any insurance business for which a valid active license is required.

In the state of CA, no rate will remain in effect if it is considered to be any of the following except:

Impartial Signup and view all the answers

The amount paid for damage to property which is equal to the price for which it could have been sold is:

Market value. Signup and view all the answers

The limited Mexico endorsement applies to trips to Mexico with a duration of:

Ten days or less. Signup and view all the answers

Which of the following types of coverage would pay for losses which occurred during the policy period and are found for up to one year after policy termination?

Loss sustained. Signup and view all the answers

If an insured borrows a neighbor's vehicle to run a personal errand, how do the policies respond in the event of an auto accident?

The neighbor's policy is primary and the driver's policy is excess. Signup and view all the answers

It is a violation of the CA insurance code to act as a producer for a non-admitted carrier unless:

The producer is a surplus lines broker. Signup and view all the answers

In CA, excess and surplus lines coverage needs to be placed through:

A surplus lines broker. Signup and view all the answers

Mitchell's unendorsed personal auto policy liability coverage would pay for:

The cost of repairing the neighbor's fence that Mitchell damaged due to the negligent operation of this car. Signup and view all the answers

An umbrella policy provides what type of coverage?

Broad excess liability coverage over one or more primary policies. Signup and view all the answers

What is it called when Carmen's negligent operation of her car injures members of the public, and her employer may be held liable?

Vicarious liability. Signup and view all the answers

What coverage is available under the liability portion of an unendorsed personal auto policy if the named insured is operating a company car on a regular basis?

The policy excludes this coverage. Signup and view all the answers

A possibility of financial loss resulting from the ownership of property is known as:

Insurable interest. Signup and view all the answers

What is the limit for sound reproducing equipment under the coverage endorsement for excess sound reproducing equipment, audio, visual, and data electronics?

$200. Signup and view all the answers

Which of the following is a true statement about CAARP?

The minimum liability for CAARP is 15/30/5. Signup and view all the answers

The amount to replace an insured's damaged property less depreciation is known as:

Actual cash value. Signup and view all the answers

What's the difference between the per occurrence limit in a split limits policy and the combined single limit?

The per occurrence limit applies only to bodily injuries, the combined single limit applies to all claims. Signup and view all the answers

If an insured rents an auto while on vacation, what coverage, if any, will be available for physical damage coverage under a personal auto policy?

The broadest coverage on any auto shown in the declarations. Signup and view all the answers

What is the minimum discount percentage for the good driver discount?

Twenty percent. Signup and view all the answers

What is the primary difference between umbrella and excess liability policies?

The umbrella covers most liability exposures; the excess liability may cover only one line. Signup and view all the answers

The intentional relinquishment of a known right is:

Waiver. Signup and view all the answers

In the business of insurance, concealment is defined by all of the following statements except:

Does not occur if no inquiry is made Signup and view all the answers

All of the following are characteristics of an 'ideally insurable loss exposure' except:

Losses that are catastrophic Signup and view all the answers

The personal auto policy territory limits include:

Montreal, Canada. Signup and view all the answers

The collision coverage of a personal auto policy covers:

Damages caused by the insured driving into a tree that had fallen during a recent storm. Signup and view all the answers

Study Notes

Contract Breach and Remedies

A party in breach of contract may incur damages, reasonable attorney fees, and associated costs.

Insurance Contract Representation

A representation in an insurance contract is classified as an implied warranty.

Inactive Insurance License

An inactive insurance license means the agent is prohibited from engaging in any insurance transactions requiring an active license.

Rate Regulations in California

In California, a rate can only be deemed ineffective if it is considered biased, not impartial.

Property Damage Valuation

Market value refers to the price at which damaged property could have been sold.

Limited Mexico Endorsement

The limited Mexico endorsement is applicable for trips to Mexico lasting ten days or less.

Policy Coverage Period

"Loss sustained" coverage pays for losses occurring during the policy term that are reported within one year post-policy termination.

Insurance Policy Response in Accidents

When borrowing a neighbor's vehicle, the neighbor's insurance policy is primary, while the driver's policy serves as excess coverage.

California Insurance Code Violation

Acting as a producer for a non-admitted carrier without being a surplus lines broker violates the California insurance code.

Surplus Lines Coverage in California

Excess and surplus lines coverage must be placed through a surplus lines broker in California.

Liability Coverage in Auto Policies

An unendorsed personal auto policy would cover damage costs, such as repairing a neighbor's fence due to negligent operation.

Umbrella Policy Functionality

An umbrella policy provides broader excess liability coverage over one or more primary insurance policies.

Vicarious Liability Explanation

Employers may be held liable for employees' negligent actions under the principle of vicarious liability.

Company Car Liability Exclusion

Under an unendorsed personal auto policy, liability coverage is excluded when the named insured uses a company car regularly.

Insurable Interest Definition

Insurable interest refers to the potential for financial loss associated with property ownership.

Sound Reproducing Equipment Limit

The coverage limit for sound reproducing equipment under the personal auto policy endorsement is $200.

CAARP Liability Minimums

The California Automobile Assigned Risk Plan (CAARP) mandates a minimum liability of 15/30/5.

Actual Cash Value Calculation

Actual cash value is determined by replacing damaged property and subtracting depreciation.

Policy Limits Comparison

The per occurrence limit in split limits applies only to bodily injury claims, while the combined single limit covers all claims.

Rental Car Coverage

When renting a car on vacation, the personal auto policy provides the broadest coverage for any vehicle listed in the declarations.

Good Driver Discount Requirement

A minimum discount of twenty percent is required for the good driver discount in insurance policies.

Umbrella vs. Excess Liability Policies

Umbrella policies cover a broader range of liability exposures compared to excess liability policies, which may only cover single lines.

Waiver Definition

Waiver is defined as the intentional relinquishment of a known right.

Concealment in Insurance

Concealment pertains to information that is not disclosed, but will not be deemed to have occurred if no inquiry is made.

Characteristics of Insurable Loss Exposure

An ideally insurable loss exposure must not include catastrophic losses.

Personal Auto Policy Territory

The territory limits of a personal auto policy extend to Montreal, Canada.

Collision Coverage Explanation

Collision coverage in a personal auto policy applies to damages, such as hitting a tree fallen during a storm.

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Test your knowledge with these flashcards designed for the Limited Lines Automobile exam. Each card covers critical concepts like contract breaches, representations in insurance, and the implications of an inactive insurance license. Perfect for exam preparation and review!