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AINS 103: CHAPTER 4 QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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AINS 103: CHAPTER 4 QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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AINS 103: CHAPTER 4 QUESTIONS ANDANSWERS WITH SOLUTIONS 2024
What format do most insurers use for commercial auto coverage? - ANSWER Due to auto insurance
needs and legal requirements, coverage needs can vary, which is why most insurers use a flexible,
modular format.
Business Auto Coverage Form (BACF): - ANSWER Provides auto liability insurance and includes optional
coverage for physical damage to autos.
BACF Liability Coverage: - ANSWER The insurer agrees to pay damages for bodily injury or property
damage the insured is liable for that is caused by an accident involving a covered auto. Exclusions, policy
limits and other conditions may apply.
BACF Physical Damage Coverage: - ANSWER Coverage is optional, but is often required if a business is
financing or leasing its autos.
The BACF allows a business to select from three basic physical damage coverages: - ANSWER -Collision
-Comprehensive
-Specified Causes of Loss
Collision Coverage: - ANSWER Insures direct and accidental loss of or damage to a covered auto caused
by its collision with another object or is overturned.
Comprehensive Coverage: - ANSWER Open perils coverage, which insures direct and accidental loss of or
damage to a covered auto by any peril EXCEPT collision, overturn, or one specifically excluded. Overlaps
with Specified Causes of Loss Coverage.
Specified Causes of Loss Coverage: - ANSWER Covers direct and accidental loss caused by fire, lightning,
explosion, theft, windstorm, hail, earthquake, flood, mischief, vandalism, or loss resulting from the
sinking, burning, collision, or derailment of a conveyance transporting the covered auto. Overlaps with
Comprehensive Coverage.
, Important Endorsements: - ANSWER Coverages for medical payments, personal injury protection (PIP),
uninsured motorists (UM), and underinsured motorists (UIM) are commonly added by endorsements to
commercial auto coverage forms.
Auto Medical Payments Coverage: - ANSWER Pays small bodily injury claims resulting from an auto
accident, regardless of fault.
(Personal Injury Protection (PIP) Coverage: - ANSWER May be legally required by state law. It pays
benefits, regardless of fault, for medical expense, income loss, and other expenses resulting from an
accident.
Uninsured/Underinsured Motorist (UM/UIM) Coverage: - ANSWER Pays for injuries caused by another
motorist who is uninsured/underinsured and unable to pay as a result.
Jane is an Electrician who drives her employer covered auto, a van, to a customer's house. While parked,
the van leaked coolant on the customers driveway. Does the BACF provide coverage for the pollution
cleanup? - ANSWER Yes.
What three basic physical damage coverages does the BACF offer to businesses? - ANSWER -Collision
-Comprehensive
-Specified Causes of Loss
Which example would qualify as an uninsured motorist pursuant to an uninsured motorist UM
endorsement on a business auto policy? - ANSWER A hit-and-run driver.
The Morlyn Corporation has a Business Auto Coverage Form (BACF) that provides liability coverage for
any auto. In addition to the named insured, who/what would also be an insured under Morlyn's BACF
when driving a covered auto? - ANSWER An employee driving a vehicle leased by Morlyn for business
purposes.
Coverage will apply under the liability insuring agreement of the Business Auto Coverage Form (BACF)
for bodily injury or property damage due to: - ANSWER Caused by an accident.
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