Automobile Liability Insurance Practice Exam Quiz
What is the primary purpose of automobile liability insurance?
A) To cover the cost of damages to your own vehicle
B) To protect you from lawsuits if you are at fault in an accident
C) To pay for medical bills of the other party in an accident
D) To cover the cost of your vehicle repair
Answer: B) To protect you from lawsuits if you are at fault in an accident
Which of the following is typically covered under liability insurance?
A) Damage to your own vehicle
B) Damage to another person’s vehicle and their property
C) Your medical expenses
D) Legal fees for non-accident-related issues
Answer: B) Damage to another person’s vehicle and their property
What does PIP (Personal Injury Protection) primarily cover?
A) Damage to your car
B) Legal fees associated with an accident
C) Medical expenses and lost wages for the insured, regardless of fault
D) The cost of repairs for the other driver’s vehicle
Answer: C) Medical expenses and lost wages for the insured, regardless of fault
In which scenario would PIP insurance be useful?
A) If you’re at fault and the other driver sues you
B) If you need to repair your car
C) If you’re injured in an accident, regardless of fault
D) If your vehicle is stolen
Answer: C) If you’re injured in an accident, regardless of fault
Which of the following does liability insurance NOT cover?
A) Damage to another person’s property
B) Injuries sustained by the other driver
C) Medical bills for the policyholder
D) Damage to the policyholder’s own vehicle
Answer: D) Damage to the policyholder’s own vehicle
What is typically the minimum required automobile liability insurance coverage in most states?
A) $10,000 for bodily injury per person
B) $50,000 for property damage
C) $100,000 for total bodily injury coverage per accident
D) Coverage limits vary by state
Answer: D) Coverage limits vary by state
What does bodily injury liability insurance cover?
A) Damage to another driver’s vehicle
B) Medical expenses and lost wages of the other driver and passengers
C) Your vehicle repairs
D) Damage to your own vehicle
Answer: B) Medical expenses and lost wages of the other driver and passengers
What does property damage liability insurance cover?
A) Damage to your own car
B) Damage to another person’s vehicle or other property
C) Injuries to the other driver
D) Your medical bills
Answer: B) Damage to another person’s vehicle or other property
If you have both PIP and health insurance, which one will cover your medical expenses first?
A) PIP insurance
B) Health insurance
C) Both will cover equally
D) It depends on the state laws
Answer: A) PIP insurance
Under what circumstances can liability insurance cover legal fees?
A) If the policyholder is at fault and is sued by the other party
B) If the policyholder files a claim with their own insurance company
C) If the other driver refuses to pay for their damages
D) If the accident involves a non-driving-related incident
Answer: A) If the policyholder is at fault and is sued by the other party
What is the difference between PIP and medical payments (MedPay) coverage?
A) PIP covers lost wages, while MedPay only covers medical expenses
B) PIP covers medical expenses for both drivers, while MedPay only covers the policyholder’s expenses
C) MedPay is mandatory, while PIP is optional
D) PIP covers repair costs, while MedPay covers personal property damage
Answer: A) PIP covers lost wages, while MedPay only covers medical expenses
What does uninsured motorist coverage protect you against?
A) Damage caused by natural disasters
B) Injuries from a driver who has no insurance
C) Legal fees in accidents
D) Loss of personal belongings during a crash
Answer: B) Injuries from a driver who has no insurance
If an at-fault driver has insufficient insurance, which type of coverage can help?
A) Uninsured motorist coverage
B) Underinsured motorist coverage
C) Collision coverage
D) Comprehensive coverage
Answer: B) Underinsured motorist coverage
What is the role of comprehensive coverage in an automobile insurance policy?
A) It covers injury claims resulting from an accident
B) It covers damage to your car from non-collision events, such as theft or weather-related damage
C) It pays for medical expenses
D) It protects against damage caused by uninsured drivers
Answer: B) It covers damage to your car from non-collision events, such as theft or weather-related damage
What is a deductible in an automobile liability insurance policy?
A) The amount the insurance company will pay after an accident
B) The amount you must pay out-of-pocket before insurance coverage kicks in
C) The maximum amount of liability coverage
D) The cost of repairing your own vehicle
Answer: B) The amount you must pay out-of-pocket before insurance coverage kicks in
Which of the following scenarios would NOT be covered under liability insurance?
A) The policyholder hits another vehicle while running a red light
B) The policyholder crashes their car into a tree
C) The policyholder causes an accident resulting in bodily injury to others
D) The policyholder damages another driver’s property
Answer: B) The policyholder crashes their car into a tree
Who is typically covered under a policyholder’s automobile liability insurance?
A) Only the policyholder
B) The policyholder and anyone driving their car with permission
C) Only family members who are listed on the policy
D) Only the policyholder’s spouse
Answer: B) The policyholder and anyone driving their car with permission
In the event of an accident, what should a policyholder do to file a claim under their liability insurance?
A) Immediately pay for the damages to the other party
B) Call their insurance company to report the accident
C) Only contact their lawyer
D) Wait for the other driver to file the claim
Answer: B) Call their insurance company to report the accident
What is the purpose of collision coverage?
A) It covers the costs of medical expenses for others
B) It covers the damage to your own vehicle if you are at fault
C) It provides legal defense if you are sued
D) It covers damage to another driver’s property
Answer: B) It covers the damage to your own vehicle if you are at fault
How can the amount of your liability insurance premium be reduced?
A) By increasing your deductible
B) By reducing your coverage limits
C) By purchasing comprehensive coverage
D) By filing fewer claims
Answer: A) By increasing your deductible
Which of the following is true about Personal Injury Protection (PIP) insurance?
A) It is required in all states
B) It only covers medical expenses for the driver
C) It can cover medical expenses, lost wages, and other expenses
D) It is only available as an add-on to health insurance
Answer: C) It can cover medical expenses, lost wages, and other expenses
If a driver has both liability insurance and collision coverage, which will cover the damage to their own vehicle in an accident?
A) Liability insurance
B) Collision coverage
C) PIP insurance
D) Comprehensive coverage
Answer: B) Collision coverage
What type of insurance would typically cover medical expenses for a passenger in the insured vehicle?
A) Liability insurance
B) PIP insurance
C) Collision insurance
D) Uninsured motorist insurance
Answer: B) PIP insurance
How does liability insurance benefit someone who is not at fault in an accident?
A) It covers their medical bills
B) It covers damage to their vehicle
C) It provides coverage for the other driver’s damages and injuries
D) It pays for their lost wages
Answer: C) It provides coverage for the other driver’s damages and injuries
Which of the following statements is true regarding no-fault insurance laws?
A) Drivers must prove fault in order to receive compensation for damages
B) Drivers are not required to have any form of liability insurance
C) Drivers are compensated by their own insurance company, regardless of fault
D) Only pedestrians are eligible for compensation under no-fault insurance
Answer: C) Drivers are compensated by their own insurance company, regardless of fault
What does “stacking” insurance refer to?
A) Combining multiple insurance policies into one package
B) Adding extra coverage for additional drivers
C) Increasing the policy limits by combining the coverage of multiple cars
D) Using both liability and collision coverage to pay for the same claim
Answer: C) Increasing the policy limits by combining the coverage of multiple cars
What is typically the maximum amount of liability coverage a driver can have?
A) $1 million
B) It depends on the driver’s state and insurer
C) $500,000
D) There is no maximum
Answer: B) It depends on the driver’s state and insurer
What is the most likely effect of having a high deductible on an insurance policy?
A) Lower monthly premium payments
B) Higher premium payments
C) Increased coverage limits
D) Increased risk of being sued
Answer: A) Lower monthly premium payments
Which type of insurance would you use if you are hit by an uninsured driver?
A) Comprehensive coverage
B) Uninsured motorist coverage
C) Collision coverage
D) Liability coverage
Answer: B) Uninsured motorist coverage
Which of the following best describes the term “subrogation” in automobile insurance?
A) A way for an insurance company to recover costs from the at-fault party’s insurer
B) The process of adding additional coverage to a policy
C) A type of claim for medical expenses
D) A discount for bundling policies
Answer: A) A way for an insurance company to recover costs from the at-fault party’s insurer
Which of the following types of coverage is typically mandatory in a “no-fault” state?
A) Comprehensive coverage
B) Personal Injury Protection (PIP)
C) Uninsured motorist coverage
D) Collision coverage
Answer: B) Personal Injury Protection (PIP)
What does comprehensive auto insurance cover?
A) Only accidents involving other vehicles
B) Damage to your car resulting from non-collision incidents, such as weather or vandalism
C) Injuries to passengers in your car
D) Damage to someone else’s property
Answer: B) Damage to your car resulting from non-collision incidents, such as weather or vandalism
In which situation would you most likely use your uninsured motorist coverage?
A) If the other driver has insurance, but their coverage is insufficient
B) If you are hit by a driver who has no insurance
C) If your own car is stolen
D) If you are involved in a hit-and-run and cannot identify the driver
Answer: B) If you are hit by a driver who has no insurance
If a driver is involved in an accident and is found to be at fault, what does their liability insurance typically cover?
A) The driver’s own vehicle repair costs
B) Legal costs associated with defending the driver in court
C) The damages to the other driver’s car and the other driver’s medical expenses
D) Only the damage to the at-fault driver’s vehicle
Answer: C) The damages to the other driver’s car and the other driver’s medical expenses
Which of the following is NOT typically covered by Personal Injury Protection (PIP)?
A) Medical expenses for the insured
B) Lost wages for the insured
C) Property damage to the insured’s car
D) Funeral expenses for the insured
Answer: C) Property damage to the insured’s car
Which type of auto insurance covers damages to your car when you are at fault in an accident?
A) Liability insurance
B) Comprehensive insurance
C) Collision insurance
D) Personal Injury Protection (PIP)
Answer: C) Collision insurance
Under which condition can a driver claim damages for an accident using their own insurance, even if they were not at fault?
A) If they have comprehensive insurance
B) If they are in a no-fault state with Personal Injury Protection (PIP) coverage
C) If they have uninsured motorist coverage
D) If they have property damage liability
Answer: B) If they are in a no-fault state with Personal Injury Protection (PIP) coverage
What is typically the benefit of having higher liability limits on your insurance policy?
A) Lower premiums
B) More protection against legal claims and damages in case of an accident
C) A smaller deductible
D) Reduced risk of being involved in an accident
Answer: B) More protection against legal claims and damages in case of an accident
In the event of an accident with an underinsured motorist, which type of coverage would help the policyholder?
A) Collision insurance
B) Underinsured motorist coverage
C) Liability insurance
D) Uninsured motorist coverage
Answer: B) Underinsured motorist coverage
What is the typical purpose of a bodily injury liability coverage?
A) To repair your car after an accident
B) To protect you if you cause injuries to others in an accident
C) To cover medical expenses for your own injuries
D) To provide coverage for the cost of your car’s repairs
Answer: B) To protect you if you cause injuries to others in an accident
What is the role of a claims adjuster in automobile insurance?
A) To repair the damage to the insured’s vehicle
B) To provide legal defense for the insured in court
C) To investigate and determine the payout amount for a claim
D) To negotiate the insurance premium
Answer: C) To investigate and determine the payout amount for a claim
How can adding a teenage driver to an insurance policy affect the premium?
A) It will lower the premium
B) It will have no impact on the premium
C) It may increase the premium due to the higher risk
D) It will require the policyholder to purchase more liability coverage
Answer: C) It may increase the premium due to the higher risk
If a driver has personal injury protection (PIP) but is not at fault in an accident, which medical costs will PIP cover?
A) Only the costs for medical procedures related to surgery
B) Medical costs for the policyholder and passengers, regardless of fault
C) Medical costs for the other driver
D) Medical costs for the policyholder only
Answer: B) Medical costs for the policyholder and passengers, regardless of fault
What is a typical feature of liability insurance in an auto policy?
A) It covers damages to the policyholder’s own car in case of an accident
B) It provides coverage for bodily injury and property damage to others
C) It covers the repair costs for the at-fault party’s vehicle
D) It includes coverage for damage from vandalism
Answer: B) It provides coverage for bodily injury and property damage to others
What happens if a policyholder is found to be at fault in an accident and has insufficient liability insurance to cover all damages?
A) The policyholder will have to pay the remaining balance out of pocket
B) The other driver’s insurance will cover the costs
C) The insurance company will cover any excess damage
D) The state will cover the balance
Answer: A) The policyholder will have to pay the remaining balance out of pocket
What is the main difference between collision insurance and comprehensive insurance?
A) Collision insurance covers damages caused by weather, while comprehensive covers damages from accidents
B) Collision insurance covers damage from an accident, while comprehensive covers damage from non-accident events like theft or fire
C) Collision insurance is mandatory, while comprehensive is optional
D) There is no difference; they cover the same types of damage
Answer: B) Collision insurance covers damage from an accident, while comprehensive covers damage from non-accident events like theft or fire
In a lawsuit arising from a car accident, what would liability insurance cover?
A) Only the cost of the car repairs for the at-fault driver
B) Legal costs and any damages the at-fault driver is ordered to pay
C) Only the medical expenses of the at-fault driver
D) None of the above
Answer: B) Legal costs and any damages the at-fault driver is ordered to pay
Which of the following could reduce a driver’s liability insurance premiums?
A) Higher deductibles
B) Having a sports car
C) Lower coverage limits
D) Adding more drivers to the policy
Answer: A) Higher deductibles
What is typically NOT included in a standard automobile liability insurance policy?
A) Property damage liability
B) Bodily injury liability
C) Collision coverage
D) Personal Injury Protection (PIP)
Answer: C) Collision coverage
Which of the following insurance types is usually required for a lease or loan?
A) Liability insurance
B) Collision and comprehensive insurance
C) Personal Injury Protection (PIP)
D) Uninsured motorist coverage
Answer: B) Collision and comprehensive insurance
Which of the following is a characteristic of “split limit” automobile liability insurance?
A) It offers one coverage limit for both property damage and bodily injury
B) It divides the coverage into different amounts for bodily injury per person, bodily injury per accident, and property damage
C) It provides unlimited coverage for both property and bodily injury
D) It only covers bodily injury to the policyholder
Answer: B) It divides the coverage into different amounts for bodily injury per person, bodily injury per accident, and property damage
What type of insurance would be necessary if you were in an accident and the other driver fled the scene without insurance?
A) Liability insurance
B) Collision coverage
C) Uninsured motorist coverage
D) Personal Injury Protection (PIP)
Answer: C) Uninsured motorist coverage
What does a “policy limit” refer to in automobile liability insurance?
A) The amount the insurance company will charge for a policy
B) The maximum amount the insurance company will pay for covered damages
C) The deductible amount
D) The amount the insured will pay if they cause an accident
Answer: B) The maximum amount the insurance company will pay for covered damages
In a personal injury protection (PIP) claim, who typically determines the medical expenses that will be paid?
A) The policyholder
B) The insurance company, after reviewing the medical bills
C) A court of law
D) The doctor treating the injured party
Answer: B) The insurance company, after reviewing the medical bills
What does “underinsured motorist coverage” protect against?
A) A situation where the other driver has no insurance
B) A situation where the other driver’s insurance is insufficient to cover all damages
C) Damage to the policyholder’s own vehicle
D) Damage caused by weather-related events
Answer: B) A situation where the other driver’s insurance is insufficient to cover all damages
What is the primary purpose of Personal Injury Protection (PIP) insurance?
A) To cover the damages to the policyholder’s vehicle
B) To cover medical expenses and lost wages for the policyholder and passengers
C) To cover repair costs for other drivers’ vehicles
D) To cover damages to the policyholder’s property
Answer: B) To cover medical expenses and lost wages for the policyholder and passengers
If a driver is involved in a car accident and has comprehensive insurance, which type of damages would likely be covered?
A) Injuries to other drivers
B) Damage to the driver’s vehicle from a collision with another vehicle
C) Non-collision damage to the driver’s vehicle, such as theft or vandalism
D) Legal defense costs for the driver
Answer: C) Non-collision damage to the driver’s vehicle, such as theft or vandalism
In a state with “no-fault” insurance laws, which type of coverage generally covers a driver’s medical bills, regardless of who is at fault?
A) Liability insurance
B) Collision coverage
C) Personal Injury Protection (PIP)
D) Uninsured motorist coverage
Answer: C) Personal Injury Protection (PIP)
What would liability insurance typically cover in a scenario where the policyholder is at fault in an accident?
A) The policyholder’s medical expenses
B) Damage to the policyholder’s own vehicle
C) Property damage and bodily injury to others involved in the accident
D) Damage to the policyholder’s property
Answer: C) Property damage and bodily injury to others involved in the accident
Which of the following is true regarding “underinsured motorist” coverage?
A) It protects the policyholder in case the other driver’s insurance is insufficient to cover the full cost of damages.
B) It only applies if the other driver has no insurance.
C) It covers the policyholder’s medical bills regardless of fault.
D) It is the same as Personal Injury Protection (PIP).
Answer: A) It protects the policyholder in case the other driver’s insurance is insufficient to cover the full cost of damages.
What is typically excluded from coverage under a standard auto liability insurance policy?
A) Damage to the policyholder’s own car
B) Medical expenses for the policyholder’s injuries
C) Damage caused by a hit-and-run driver
D) Medical bills for passengers in the insured vehicle
Answer: A) Damage to the policyholder’s own car
What is the minimum coverage requirement in most states for liability insurance?
A) Personal Injury Protection (PIP)
B) Property damage and bodily injury liability
C) Collision and comprehensive coverage
D) Uninsured motorist coverage
Answer: B) Property damage and bodily injury liability
In what situation is the “medical payments” coverage useful?
A) It covers the policyholder’s legal costs in a lawsuit.
B) It covers the policyholder’s medical bills regardless of fault.
C) It covers the cost of repairing the policyholder’s car.
D) It covers the policyholder’s damages when another driver is at fault.
Answer: B) It covers the policyholder’s medical bills regardless of fault.
Which of the following types of insurance is designed to pay for the damage done to the policyholder’s vehicle during a collision?
A) Comprehensive insurance
B) Collision insurance
C) Liability insurance
D) Personal Injury Protection (PIP)
Answer: B) Collision insurance
How does “no-fault” insurance differ from a traditional liability insurance system?
A) No-fault insurance covers all damages, regardless of who caused the accident.
B) No-fault insurance only applies if the policyholder is at fault.
C) No-fault insurance does not require the policyholder to file a claim against the at-fault party.
D) No-fault insurance covers only the property damage to the other party.
Answer: C) No-fault insurance does not require the policyholder to file a claim against the at-fault party.
Which of the following insurance types would most likely cover medical expenses in a “no-fault” state after an accident, even if the policyholder caused the accident?
A) Liability insurance
B) Personal Injury Protection (PIP)
C) Collision insurance
D) Uninsured motorist coverage
Answer: B) Personal Injury Protection (PIP)
What would happen if a policyholder in a “fault” state has no insurance and is involved in an accident?
A) Their vehicle will be automatically repaired by the state.
B) They would be personally liable for the damages they caused to others.
C) They would not be required to pay for damages.
D) Their property damage would be covered under uninsured motorist coverage.
Answer: B) They would be personally liable for the damages they caused to others.
What is a “deductible” in automobile insurance?
A) The amount the insurance company will pay for a claim.
B) The amount the policyholder must pay out-of-pocket before the insurance company covers the rest.
C) The premium the policyholder pays each month.
D) The amount the policyholder’s premiums are reduced for good driving.
Answer: B) The amount the policyholder must pay out-of-pocket before the insurance company covers the rest.
How does “collision coverage” typically work in an accident?
A) It covers the cost of damages to the policyholder’s car, regardless of fault.
B) It covers the policyholder’s medical bills, regardless of fault.
C) It covers only the cost of repairs to the other driver’s vehicle.
D) It covers the cost of a rental car while the policyholder’s vehicle is being repaired.
Answer: A) It covers the cost of damages to the policyholder’s car, regardless of fault.
What is typically the most significant advantage of having Personal Injury Protection (PIP) coverage in a no-fault state?
A) It protects the policyholder’s vehicle from theft.
B) It provides medical coverage for the policyholder and passengers, regardless of who caused the accident.
C) It covers the cost of repairing another person’s car.
D) It helps the policyholder recover costs from uninsured drivers.
Answer: B) It provides medical coverage for the policyholder and passengers, regardless of who caused the accident.
If a policyholder is involved in an accident with an uninsured driver, which type of insurance could help cover the costs?
A) Collision coverage
B) Uninsured motorist coverage
C) Personal Injury Protection (PIP)
D) Comprehensive insurance
Answer: B) Uninsured motorist coverage
What does a “liability limit” refer to in an auto insurance policy?
A) The maximum amount the insurance company will pay for a claim.
B) The deductible amount the policyholder must pay.
C) The amount of coverage for medical expenses only.
D) The amount of premiums the policyholder pays annually.
Answer: A) The maximum amount the insurance company will pay for a claim.
How does “uninsured motorist coverage” differ from “underinsured motorist coverage”?
A) Uninsured motorist coverage protects against drivers with no insurance; underinsured motorist coverage applies when the driver’s insurance is insufficient to cover all damages.
B) Underinsured motorist coverage applies only if the policyholder is at fault.
C) Both cover the cost of repairs to the policyholder’s car.
D) Uninsured motorist coverage applies to property damage only, while underinsured covers medical expenses.
Answer: A) Uninsured motorist coverage protects against drivers with no insurance; underinsured motorist coverage applies when the driver’s insurance is insufficient to cover all damages.
What type of coverage would typically be required if you are financing or leasing a car?
A) Comprehensive and collision insurance
B) Only liability insurance
C) Personal Injury Protection (PIP)
D) Property damage liability insurance
Answer: A) Comprehensive and collision insurance
What happens if a policyholder is involved in a car accident but does not have sufficient insurance coverage to pay for damages?
A) The policyholder’s insurance will cover the remaining costs.
B) The at-fault driver’s insurance will cover the costs.
C) The policyholder may have to pay out-of-pocket for damages that exceed the policy limit.
D) The state will cover the remaining costs.
Answer: C) The policyholder may have to pay out-of-pocket for damages that exceed the policy limit.
What does the term “bodily injury liability” in an auto insurance policy refer to?
A) It covers medical bills for the policyholder’s injuries in an accident.
B) It covers legal fees for the policyholder in case of a lawsuit.
C) It covers the policyholder’s injuries in case of an accident with an uninsured driver.
D) It covers injuries to others caused by the policyholder’s actions in an accident.
Answer: D) It covers injuries to others caused by the policyholder’s actions in an accident.
Which of the following best describes the role of “Property Damage Liability” in an auto insurance policy?
A) It covers damage to the policyholder’s vehicle after a collision.
B) It covers the cost of repairing or replacing other people’s property damaged by the policyholder.
C) It covers the cost of medical expenses for passengers in the policyholder’s vehicle.
D) It provides compensation for the policyholder’s lost wages after an accident.
Answer: B) It covers the cost of repairing or replacing other people’s property damaged by the policyholder.
What is the purpose of “uninsured motorist property damage” coverage in an auto insurance policy?
A) To pay for the policyholder’s medical expenses if the other driver is uninsured.
B) To cover damage to the policyholder’s vehicle caused by an uninsured driver.
C) To cover the cost of repairs for another driver’s vehicle in a collision.
D) To pay for the legal fees of the policyholder involved in a crash with an uninsured driver.
Answer: B) To cover damage to the policyholder’s vehicle caused by an uninsured driver.
Which of the following is NOT covered under “Comprehensive insurance”?
A) Damage caused by fire
B) Theft of the policyholder’s vehicle
C) Damage to the policyholder’s car due to a collision with another vehicle
D) Vandalism to the policyholder’s vehicle
Answer: C) Damage to the policyholder’s car due to a collision with another vehicle
What is typically the primary factor in determining a person’s auto insurance premium?
A) The make and model of the policyholder’s vehicle
B) The number of passengers in the policyholder’s vehicle
C) The policyholder’s credit score
D) The policyholder’s occupation
Answer: A) The make and model of the policyholder’s vehicle
If a policyholder has “Collision insurance,” which of the following would be covered?
A) Damage to the policyholder’s car in an accident, regardless of who was at fault
B) Damage to the policyholder’s car from fire, flood, or theft
C) Medical bills for the policyholder’s passengers
D) Damage caused by vandalism to the policyholder’s car
Answer: A) Damage to the policyholder’s car in an accident, regardless of who was at fault
What is the role of a deductible in an auto insurance policy?
A) It represents the maximum amount the insurance company will pay for a claim.
B) It is the amount the policyholder must pay before the insurance company covers the rest of the costs.
C) It is the annual premium paid by the policyholder to maintain coverage.
D) It covers the cost of the policyholder’s car repairs after an accident.
Answer: B) It is the amount the policyholder must pay before the insurance company covers the rest of the costs.
Which of the following is most likely to be covered by “Personal Injury Protection” (PIP) insurance?
A) Medical expenses and lost wages for the policyholder and passengers in the event of an accident
B) Legal fees for the policyholder in a lawsuit following an accident
C) Repair costs for the policyholder’s vehicle
D) Damage to property caused by the policyholder’s actions in an accident
Answer: A) Medical expenses and lost wages for the policyholder and passengers in the event of an accident
What would happen if a policyholder does not carry enough insurance to cover all damages from an accident they caused?
A) The insurance company will cover the remaining costs.
B) The state will pay for the remaining costs.
C) The policyholder may have to pay for the remaining costs out-of-pocket.
D) The other party’s insurance will cover the remaining costs.
Answer: C) The policyholder may have to pay for the remaining costs out-of-pocket.
If a policyholder’s car is damaged in an accident and the other driver does not have insurance, which type of coverage could help the policyholder?
A) Uninsured motorist coverage
B) Comprehensive coverage
C) Collision coverage
D) Personal Injury Protection (PIP)
Answer: A) Uninsured motorist coverage
What does “gap insurance” typically cover?
A) The difference between the current value of the car and the remaining balance on the auto loan or lease in case of a total loss
B) The cost of repairing the policyholder’s vehicle after a collision
C) Medical expenses for the policyholder in case of an accident
D) The policyholder’s liability for damages to another person’s vehicle
Answer: A) The difference between the current value of the car and the remaining balance on the auto loan or lease in case of a total loss
What is the function of the “no-fault” insurance system?
A) It limits the amount of coverage a policyholder can claim from their insurance company.
B) It requires drivers to take legal action against the other driver in the event of an accident.
C) It allows drivers to recover damages from their own insurance company, regardless of who caused the accident.
D) It provides higher premiums for drivers who are at fault in accidents.
Answer: C) It allows drivers to recover damages from their own insurance company, regardless of who caused the accident.
What is the primary function of “liability insurance” in an auto insurance policy?
A) To cover the policyholder’s own injuries and vehicle repairs
B) To cover damage to the policyholder’s vehicle in an accident
C) To cover the policyholder’s legal expenses
D) To cover the policyholder’s responsibility for damages to others in an accident
Answer: D) To cover the policyholder’s responsibility for damages to others in an accident
In a “no-fault” state, if a driver is injured in an accident, which insurance typically covers the medical bills?
A) Liability insurance
B) Personal Injury Protection (PIP)
C) Collision insurance
D) Uninsured motorist coverage
Answer: B) Personal Injury Protection (PIP)
Which of the following would most likely be excluded from coverage under a typical auto insurance policy?
A) Vandalism to the policyholder’s car
B) Damage to the policyholder’s vehicle in a collision with another car
C) Damage to another driver’s vehicle caused by the policyholder
D) Damage caused by a natural disaster, like an earthquake
Answer: D) Damage caused by a natural disaster, like an earthquake
If a policyholder causes an accident and has liability insurance, which of the following will most likely be covered?
A) The cost of repairing the policyholder’s own car
B) The cost of medical treatment for the policyholder
C) The legal fees for defending the policyholder in court
D) The cost of medical treatment for the other driver and passengers involved in the accident
Answer: D) The cost of medical treatment for the other driver and passengers involved in the accident
What does “Comprehensive Coverage” in an auto insurance policy typically cover?
A) Damages caused by a collision with another vehicle
B) Theft, vandalism, fire, or weather-related damages to the policyholder’s vehicle
C) Legal fees in case of a lawsuit
D) Medical expenses for the policyholder and passengers
Answer: B) Theft, vandalism, fire, or weather-related damages to the policyholder’s vehicle
What type of insurance is required to cover injuries to others in the event that the policyholder is at fault in an accident?
A) Collision coverage
B) Liability insurance
C) Comprehensive coverage
D) Personal Injury Protection (PIP)
Answer: B) Liability insurance
If a driver is involved in a collision with another car, which coverage pays for repairs to their vehicle?
A) Liability insurance
B) Collision insurance
C) Comprehensive insurance
D) Uninsured motorist insurance
Answer: B) Collision insurance
How does the “Insurance Score” (or credit score) affect the cost of auto insurance?
A) A higher insurance score typically results in lower insurance premiums.
B) A higher insurance score typically results in higher insurance premiums.
C) It has no effect on the cost of auto insurance.
D) It only affects the policyholder’s eligibility for certain types of insurance.
Answer: A) A higher insurance score typically results in lower insurance premiums.
What does “Underinsured Motorist Coverage” (UIM) provide in an auto insurance policy?
A) It covers damage to your vehicle when the other driver is underinsured.
B) It covers medical expenses for the other driver in a hit-and-run accident.
C) It covers your medical expenses if you are at fault in an accident.
D) It covers the legal costs of suing an underinsured driver.
Answer: A) It covers damage to your vehicle when the other driver is underinsured.
What is the typical deductible for comprehensive insurance coverage?
A) $0
B) $250–$500
C) $1,000–$1,500
D) The deductible varies depending on the driver’s location.
Answer: B) $250–$500
Which of the following is NOT a reason to have Personal Injury Protection (PIP) in an auto insurance policy?
A) To cover medical expenses for the policyholder and their passengers, regardless of fault.
B) To pay for funeral expenses in the event of a fatal accident.
C) To cover the cost of vehicle repairs after a collision.
D) To replace lost wages due to injury from an accident.
Answer: C) To cover the cost of vehicle repairs after a collision.
Which of the following types of auto insurance covers damage caused by vandalism?
A) Collision coverage
B) Liability insurance
C) Comprehensive coverage
D) Uninsured motorist coverage
Answer: C) Comprehensive coverage
What is the role of “Medical Payments” (MedPay) coverage in an auto insurance policy?
A) It covers the medical costs for injuries sustained by the driver and passengers, regardless of who caused the accident.
B) It covers the cost of repairing the policyholder’s car after an accident.
C) It pays for legal defense costs when the driver is sued.
D) It covers medical expenses for the other driver involved in an accident.
Answer: A) It covers the medical costs for injuries sustained by the driver and passengers, regardless of who caused the accident.
Which of the following scenarios would be covered by liability insurance in an auto insurance policy?
A) A driver’s own injuries in a collision with another vehicle.
B) Damage to another driver’s vehicle caused by the policyholder’s negligence.
C) The cost of repairing the policyholder’s vehicle after an accident.
D) Medical expenses for the driver’s own injuries.
Answer: B) Damage to another driver’s vehicle caused by the policyholder’s negligence.
What does “Full Coverage” in auto insurance typically include?
A) Only liability and collision coverage.
B) Comprehensive, collision, liability, and sometimes Personal Injury Protection (PIP) or Medical Payments (MedPay).
C) Only collision and comprehensive coverage.
D) Only comprehensive and liability coverage.
Answer: B) Comprehensive, collision, liability, and sometimes Personal Injury Protection (PIP) or Medical Payments (MedPay).
Which of the following factors can impact the cost of automobile liability insurance premiums?
A) The policyholder’s driving history and accident record.
B) The number of accidents the policyholder has been involved in.
C) The type of car the policyholder drives.
D) All of the above.
Answer: D) All of the above.
In which situation would a policyholder’s auto insurance policy most likely be canceled by the insurer?
A) The policyholder receives a traffic ticket for speeding.
B) The policyholder’s car is involved in an accident with an uninsured driver.
C) The policyholder fails to make premium payments for an extended period.
D) The policyholder requests an increase in liability coverage.
Answer: C) The policyholder fails to make premium payments for an extended period.
What is typically NOT covered by “Uninsured Motorist Coverage”?
A) Damage to your vehicle caused by an uninsured driver.
B) Medical bills for the driver and passengers in your vehicle when the other driver is uninsured.
C) Damage to another driver’s vehicle caused by an uninsured driver.
D) Injury to the policyholder caused by a hit-and-run driver.
Answer: C) Damage to another driver’s vehicle caused by an uninsured driver.
Which type of coverage would help a policyholder repair their car after hitting a deer?
A) Collision coverage
B) Comprehensive coverage
C) Liability coverage
D) Uninsured motorist coverage
Answer: B) Comprehensive coverage
What is the typical benefit of “Loss of Use” coverage in an auto insurance policy?
A) It covers the policyholder’s rental car expenses if their car is being repaired after an accident.
B) It provides compensation for a stolen vehicle.
C) It covers medical bills for the policyholder’s injuries.
D) It pays for the policyholder’s lost wages after an accident.
Answer: A) It covers the policyholder’s rental car expenses if their car is being repaired after an accident.
If a driver causes an accident and the policyholder has “Liability Insurance,” which of the following would most likely be covered?
A) The cost of repairing the policyholder’s vehicle.
B) The legal defense costs for the policyholder.
C) Medical expenses for the other driver and passengers.
D) The cost of medical treatments for the policyholder.
Answer: C) Medical expenses for the other driver and passengers.
Which of the following auto insurance types typically covers damages to the policyholder’s vehicle in a collision, regardless of fault?
A) Comprehensive coverage
B) Collision coverage
C) Liability coverage
D) Uninsured motorist coverage
Answer: B) Collision coverage
What type of coverage would typically pay for the damage to a fence when the policyholder’s car crashes into it?
A) Personal Injury Protection (PIP)
B) Collision coverage
C) Comprehensive coverage
D) Liability coverage
Answer: B) Collision coverage
Which of the following is the main purpose of “Bodily Injury Liability” insurance?
A) To cover the medical bills of the policyholder in case of an accident.
B) To cover the legal costs for the policyholder in case of a lawsuit.
C) To cover injuries to others involved in an accident caused by the policyholder.
D) To repair the policyholder’s car after an accident.
Answer: C) To cover injuries to others involved in an accident caused by the policyholder.
What is the role of “Collision Insurance” in an auto insurance policy?
A) To cover damages to the policyholder’s car when it collides with another vehicle or object.
B) To cover medical expenses for the policyholder and passengers after an accident.
C) To cover damage caused by vandalism to the policyholder’s vehicle.
D) To pay for the cost of a rental vehicle after an accident.
Answer: A) To cover damages to the policyholder’s car when it collides with another vehicle or object.
Which of the following is typically NOT covered by “Liability Insurance” in an auto insurance policy?
A) Medical expenses for the policyholder.
B) Medical expenses for the other driver’s injuries.
C) Legal fees in case the policyholder is sued.
D) Damage to the other person’s vehicle in an accident caused by the policyholder.
Answer: A) Medical expenses for the policyholder.
Which of the following situations would require a policyholder to file a claim under “Comprehensive Coverage”?
A) The policyholder crashes their car into a pole.
B) The policyholder’s car is damaged in a hailstorm.
C) The policyholder is involved in a car accident and is found at fault.
D) The policyholder causes an accident and injures someone else.
Answer: B) The policyholder’s car is damaged in a hailstorm.
If a policyholder is involved in an accident with a driver who has no insurance, which type of coverage can help the policyholder’s medical expenses?
A) Uninsured motorist coverage
B) Liability insurance
C) Collision insurance
D) Personal Injury Protection (PIP)
Answer: A) Uninsured motorist coverage
What does “Personal Injury Protection” (PIP) cover?
A) Medical expenses and lost wages regardless of who caused the accident.
B) Damage to the other party’s vehicle in the accident.
C) Legal fees for the policyholder if they are sued.
D) The cost of repairing the policyholder’s car.
Answer: A) Medical expenses and lost wages regardless of who caused the accident.
What does “Comprehensive Coverage” pay for in an auto insurance policy?
A) Damage caused by a collision.
B) Injury to passengers in the policyholder’s vehicle.
C) Non-collision-related damage to the policyholder’s vehicle (e.g., vandalism, weather damage).
D) Damage caused by an underinsured driver.
Answer: C) Non-collision-related damage to the policyholder’s vehicle (e.g., vandalism, weather damage).
Which of the following statements about auto insurance premiums is FALSE?
A) Premiums are determined by factors such as the driver’s age, driving history, and the type of vehicle.
B) A policyholder’s premium will decrease automatically if they have no accidents for several years.
C) Premiums are generally higher for high-performance and luxury vehicles.
D) A higher deductible may lead to a lower premium.
Answer: B) A policyholder’s premium will decrease automatically if they have no accidents for several years.
If an accident occurs and the policyholder is at fault, which type of insurance would cover the damage to the policyholder’s vehicle?
A) Liability insurance
B) Collision insurance
C) Comprehensive insurance
D) Personal Injury Protection (PIP)
Answer: B) Collision insurance
Which of the following would most likely be excluded from a standard auto insurance policy?
A) Injury to passengers in the policyholder’s vehicle
B) Damage to the policyholder’s vehicle due to a collision with another car
C) Damage to the policyholder’s vehicle caused by a natural disaster
D) Injury caused by the policyholder driving under the influence of alcohol
Answer: D) Injury caused by the policyholder driving under the influence of alcohol
What is the main difference between liability insurance and collision coverage?
A) Liability insurance covers damage to the policyholder’s car, while collision coverage covers damage to other vehicles.
B) Collision coverage covers damages to the policyholder’s car, while liability insurance covers damage to other vehicles or property.
C) Liability insurance only covers medical costs, while collision coverage does not.
D) Collision coverage applies only to accidents involving pedestrians, while liability insurance covers other types of accidents.
Answer: B) Collision coverage covers damages to the policyholder’s car, while liability insurance covers damage to other vehicles or property.
What does “Uninsured Motorist Property Damage” (UMPD) cover?
A) Medical bills for the policyholder when the at-fault driver is uninsured.
B) Damage to the policyholder’s car caused by an uninsured driver.
C) Legal fees for the policyholder if the other driver is uninsured.
D) The cost of rental cars after an accident.
Answer: B) Damage to the policyholder’s car caused by an uninsured driver.
Which of the following is NOT typically covered by standard automobile liability insurance?
A) Medical bills for the other driver’s injuries.
B) Damage to the policyholder’s car in a collision.
C) Damage caused by the policyholder’s negligence.
D) Legal defense costs in a lawsuit following an accident.
Answer: B) Damage to the policyholder’s car in a collision.
What is the purpose of “Bodily Injury Liability” coverage in an auto insurance policy?
A) To cover the medical expenses of the policyholder after an accident.
B) To cover damages to the policyholder’s vehicle after an accident.
C) To cover the medical expenses and lost wages of others involved in an accident caused by the policyholder.
D) To cover legal defense costs for the policyholder in case they are sued.
Answer: C) To cover the medical expenses and lost wages of others involved in an accident caused by the policyholder.
Which of the following factors would typically result in lower automobile liability insurance premiums?
A) Being a young driver with a recent accident history.
B) Driving a high-performance sports car.
C) Installing anti-theft devices in the vehicle.
D) Living in an area with a high rate of accidents and thefts.
Answer: C) Installing anti-theft devices in the vehicle.
What type of insurance is required by law in most states for all drivers?
A) Collision insurance
B) Liability insurance
C) Comprehensive insurance
D) Uninsured motorist coverage
Answer: B) Liability insurance
Which of the following best describes “Underinsured Motorist Coverage” (UIM)?
A) It covers the policyholder’s injuries when the other driver has insurance that is insufficient to cover the costs.
B) It covers the policyholder’s medical bills when they cause an accident.
C) It covers damage to the policyholder’s vehicle when the other driver is at fault.
D) It provides legal coverage for the policyholder if the other driver is underinsured.
Answer: A) It covers the policyholder’s injuries when the other driver has insurance that is insufficient to cover the costs.
Which of the following is a common scenario where “Collision Coverage” would apply?
A) Your car is damaged in a storm.
B) Your car is involved in a fender-bender with another car.
C) Your car is stolen.
D) Your car is damaged by falling debris.
Answer: B) Your car is involved in a fender-bender with another car.
What is a typical benefit of having “Personal Injury Protection” (PIP) insurance?
A) Coverage for injuries regardless of fault.
B) Coverage for medical expenses only if the driver is at fault.
C) Coverage for the policyholder’s vehicle repairs.
D) Coverage for legal defense costs in case of a lawsuit.
Answer: A) Coverage for injuries regardless of fault.
Which of the following would most likely be covered by “Comprehensive Coverage” in an auto insurance policy?
A) Damage caused to the vehicle in a collision with another car.
B) Damage to the vehicle caused by vandalism or natural disasters.
C) Damage to the policyholder’s car when they are at fault.
D) Medical bills for the policyholder’s injuries.
Answer: B) Damage to the vehicle caused by vandalism or natural disasters.
How does the “No-Fault” auto insurance system affect the process of filing claims?
A) It eliminates the need to determine fault in an accident and allows each party to file a claim with their own insurance company for medical expenses and lost wages.
B) It allows the at-fault party to avoid paying for damages.
C) It only applies to drivers who are uninsured.
D) It requires both parties involved in the accident to file claims with each other’s insurance companies.
Answer: A) It eliminates the need to determine fault in an accident and allows each party to file a claim with their own insurance company for medical expenses and lost wages.
What is typically covered by “Uninsured Motorist Bodily Injury” (UMBI) coverage?
A) The policyholder’s medical expenses if injured by a driver who does not have insurance.
B) Damage to the policyholder’s vehicle caused by an uninsured driver.
C) Legal fees if the policyholder is sued by an uninsured driver.
D) Medical bills for passengers in the policyholder’s car after an accident.
Answer: A) The policyholder’s medical expenses if injured by a driver who does not have insurance.
Which of the following does “Liability Insurance” NOT cover?
A) Medical expenses for the other driver after an accident.
B) Damage to the policyholder’s own vehicle.
C) Damage to property caused by the policyholder’s negligence.
D) Legal defense costs if the policyholder is sued after an accident.
Answer: B) Damage to the policyholder’s own vehicle.
In an accident where the policyholder is found at fault, what does “Liability Insurance” typically cover?
A) The policyholder’s medical bills.
B) The cost of repairs to the policyholder’s vehicle.
C) The cost of repairs to the other party’s vehicle and medical bills for the other party.
D) Damage caused by an uninsured motorist.
Answer: C) The cost of repairs to the other party’s vehicle and medical bills for the other party.
What is the primary purpose of “Liability Insurance” in automobile insurance?
A) To cover the policyholder’s own medical expenses.
B) To cover the damages to the policyholder’s vehicle.
C) To cover damages to other people’s property or injury caused by the policyholder.
D) To cover the cost of car repairs after a collision.
Answer: C) To cover damages to other people’s property or injury caused by the policyholder.
What does “Medical Payments” coverage in auto insurance typically cover?
A) Only medical expenses for injuries caused by the policyholder.
B) Only legal defense costs after an accident.
C) Medical expenses for the policyholder and passengers in their vehicle, regardless of fault.
D) Damage to the policyholder’s car after an accident.
Answer: C) Medical expenses for the policyholder and passengers in their vehicle, regardless of fault.
Which type of insurance is required by most states to legally drive a vehicle?
A) Collision insurance
B) Liability insurance
C) Personal Injury Protection
D) Uninsured Motorist Coverage
Answer: B) Liability insurance
What is the typical limit of coverage for Bodily Injury Liability in an auto insurance policy?
A) It only covers medical expenses for the policyholder.
B) It covers all bodily injuries, no matter the severity.
C) It covers the medical expenses and lost wages of others when the policyholder is at fault, up to the policy’s limit.
D) It covers only medical bills, not lost wages.
Answer: C) It covers the medical expenses and lost wages of others when the policyholder is at fault, up to the policy’s limit.
If a policyholder is in an accident with an underinsured driver, which insurance would cover the policyholder’s medical expenses?
A) Collision insurance
B) Liability insurance
C) Underinsured Motorist Insurance
D) Uninsured Motorist Insurance
Answer: C) Underinsured Motorist Insurance
What does “Collision Coverage” protect against in an auto insurance policy?
A) Damages to the policyholder’s car when they are at fault in a collision with another vehicle.
B) Damage caused by natural disasters or vandalism.
C) Injuries sustained by passengers in the policyholder’s vehicle.
D) Legal costs associated with the accident.
Answer: A) Damages to the policyholder’s car when they are at fault in a collision with another vehicle.
If a policyholder crashes their car into a tree while avoiding an animal in the road, which type of insurance would typically cover the damage?
A) Liability insurance
B) Collision insurance
C) Comprehensive insurance
D) Personal Injury Protection
Answer: B) Collision insurance
Which of the following scenarios would be covered by “Comprehensive Coverage”?
A) The policyholder collides with another vehicle at an intersection.
B) The policyholder’s car is damaged by hail.
C) The policyholder’s vehicle is stolen.
D) Both B and C
Answer: D) Both B and C
How does “No-Fault Insurance” work in the event of a car accident?
A) The at-fault driver’s insurance will pay for the other driver’s damages.
B) Each driver’s insurance will cover their own damages and injuries, regardless of who is at fault.
C) The insurance company of the at-fault driver will cover all damages to both vehicles.
D) The insurance company of the injured party will cover their medical expenses.
Answer: B) Each driver’s insurance will cover their own damages and injuries, regardless of who is at fault.
Which of the following is most likely to be excluded under an auto insurance policy?
A) Damage caused by driving under the influence of alcohol or drugs.
B) Injury to the policyholder in a crash.
C) Damage caused by natural disasters like floods.
D) Injuries to passengers in the policyholder’s car.
Answer: A) Damage caused by driving under the influence of alcohol or drugs.
What is “Underinsured Motorist Coverage”?
A) Insurance that covers damage to the policyholder’s vehicle if the at-fault driver does not have insurance.
B) Insurance that helps cover medical bills when the policyholder is in an accident with someone who has insufficient coverage.
C) Insurance that covers damage to the policyholder’s car if the other driver is uninsured.
D) Insurance that covers damage to the policyholder’s car when it is damaged in an accident with another vehicle.
Answer: B) Insurance that helps cover medical bills when the policyholder is in an accident with someone who has insufficient coverage.
Which type of automobile insurance covers damage caused by a driver’s negligence or failure to obey traffic laws?
A) Liability insurance
B) Comprehensive insurance
C) Collision insurance
D) Medical payments coverage
Answer: A) Liability insurance
What is typically covered by “Uninsured Motorist Coverage”?
A) The policyholder’s injuries and medical expenses when the at-fault driver has no insurance.
B) Damage to the policyholder’s vehicle when an uninsured driver hits them.
C) Both A and B
D) Medical bills for passengers in the other car.
Answer: C) Both A and B
Which of the following is a potential consequence of failing to maintain required automobile insurance?
A) Suspension of the policyholder’s driver’s license
B) Legal penalties and fines
C) Difficulty in renewing registration for the vehicle
D) All of the above
Answer: D) All of the above
What does “Personal Injury Protection” (PIP) insurance cover?
A) Only medical expenses for the policyholder
B) Injuries to the policyholder, passengers, and pedestrians, regardless of fault
C) Only the damages to the other driver’s car
D) Only lost wages for the policyholder
Answer: B) Injuries to the policyholder, passengers, and pedestrians, regardless of fault
What is the main difference between “Uninsured” and “Underinsured” motorist coverage?
A) “Uninsured” covers accidents caused by drivers with no insurance, while “Underinsured” covers drivers with insufficient coverage.
B) “Uninsured” covers drivers who cannot afford insurance, while “Underinsured” applies only when the driver is at fault.
C) “Uninsured” applies to property damage, while “Underinsured” applies to medical bills.
D) There is no difference between the two.
Answer: A) “Uninsured” covers accidents caused by drivers with no insurance, while “Underinsured” covers drivers with insufficient coverage.
In the event of an accident, how does “Property Damage Liability” coverage protect the policyholder?
A) It covers the medical expenses for the policyholder’s injuries.
B) It covers the cost of repairs to the other party’s vehicle or property that the policyholder damaged.
C) It covers the cost of legal fees if the policyholder is sued for damages.
D) It covers the damage to the policyholder’s vehicle in a collision.
Answer: B) It covers the cost of repairs to the other party’s vehicle or property that the policyholder damaged.