CPCU 552 Flashcards – Module 4
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[h] CPCU 552 – Module 4
[q] Monoline policy
[a] An insurance policy that only covers one line of business.
[q] Components of a Commercial Auto Coverage Part
[a] Components:
Declarations.
Coverage form.
Endorsements.
[q] Business Auto Coverage Form
[a] A commercial auto coverage form used to insure the auto loss exposures of any organizations that are not motor carriers or auto or trailer dealers.
[q] Auto Dealers Coverage Form
[a] A commercial auto coverage form used to insure auto dealers, trailer dealers, and other land motor vehicle dealers.
[q] Motor Carrier Coverage Form
[a] A commercial auto coverage form used to insure any person or organization providing transportation by auto in furtherance of a commercial enterprise.
[q] Business Auto Coverage Form (BACF) coverage symbols
[a] Symbols that are used with the BACF to indicate the autos to which each coverage applies. There are 10 symbols associated with the BACF.
[q] Symbol 1 – Any Auto
[a] A coverage symbol used with the BACF that covers any auto, including autos:
Owned by the named insured.
The named insured hires or borrows from others.
Other nonowned autos used in the insured’s business.
[q] Symbol 2 – Owned Autos Only
[a] A coverage symbol used with the BACF. If this symbol is entered for a coverage, that coverage applies to all autos owned by the named insured.
[q] Symbol 3 – Owned Private Passenger Autos Only
[a] A coverage symbol used with the BACF. If this symbol is entered for a coverage, that coverage applies to private passenger autos owned by the named insured.
[q] Symbol 4 – Owned Autos Other Than Private Passenger Autos Only
[a] A coverage symbol used with the BACF. If this symbol is entered for a coverage, that coverage applies to all autos owned by the named insured except private passenger autos.
[q] Symbol 5 – Owned Autos Subject to No-Fault
[a] A coverage symbol used with the BACF. This symbol is entered only on the Personal Injury Protection (PIP) line of the coverage table, and provides PIP coverage only for those autos required by law to have it.
[q] Symbol 6 – Owned Autos Subject to a Compulsory Uninsured Motorists Law
[a] A coverage symbol used with the BACF. This symbol is used for uninsured motorists coverage only.
[q] Symbol 7 – Specifically Described Autos
[a] A coverage symbol used with the BACF. If this symbol is entered for a coverage, that coverage applies only to those autos specifically described in the policy for which a premium is shown in the policy.
[q] Symbol 8 – Hired Autos Only
[a] A coverage symbol used with the BACF. If this symbol is entered for a coverage, that coverage applies only for autos leased, hired, rented, or borrowed by the named insured.
[q] Symbol 9 – Nonowned Autos Only
[a] A coverage symbol used with the BACF. This symbol is used only for signaling liability coverage, and includes only those autos that the named insured does not own, lease, hire, rent, or borrow that are used in connection with the named insured’s business.
[q] Symbol 19 – Mobile Equipment Subject to Compulsory or Financial Responsibility or Other Motor Vehicle Insurance Law Only
[a] A coverage symbol used with the BACF. This symbol provides a way to cover land motor vehicles that would meet the definition of mobile equipment if they were not subject to a motor vehicle insurance law where they are licensed or principally garaged.
[q] Duty to Pay Damages
[a] A duty of the insurer under the BACF. Under this duty, the insurer agrees to pay amounts an insured owes due to an accident with a covered auto.
[q] Duty to Pay Covered Pollution Cost or Expense
[a] A duty of the insurer under the BACF. Under this duty, the insurer agrees to pay amounts an insured owes due to certain pollution costs and expenses. For pollution cost or expense to be covered, it must be caused by an accident and result from the ownership, maintenance, or use of a covered auto.
[q] Duty to Defend
[a] A duty of the insurer under the BACF. Under this duty, the insurer has the right and the duty to defend any insured. The insurer must defend against even false or fraudulent claims or suits.
[q] BACF supplementary liability payments
[a] BACF supplementary liability payments:
All expenses incurred by the insurer.
Up to $2,000 for the cost of bail bonds.
Cost of bonds to release attachments.
Reasonable expenses incurred by the insured.
Court costs taxed against the insured.
Post-judgment interest.
[q] Care, Custody, or Control exclusion
[a] An exclusion under the BACF that eliminates coverage for property owned by the insured or in the care, custody, or control of the insured.
[q] Handling of Property exclusion
[a] An exclusion under the BACF that eliminates coverage for bodily injury or property damage resulting from the handling of property.
[q] Pollution exclusion
[a] An exclusion under the BACF that eliminates coverage for the discharge of any pollutants being transported or stored in a covered auto.
[q] Section III – Physical Damage coverage
[a] A coverage section of the BACF that provides coverage for damage to autos owned by the named insured.
[q] Section III – Physical Damage types of coverage
[a] Basic types of coverage:
Collision.
Comprehensive.
Specified Causes of Loss.
[q] Collision coverage
[a] A type of basic physical damage coverage offered under the BACF. This coverage insures direct and accidental loss of or damage to a covered auto caused by its collision with another object or its overturn.
[q] Comprehensive coverage
[a] A type of basic physical damage coverage offered under the BACF that provides coverage on an open-perils basis. This coverage insures direct and accidental loss or damage to a covered auto by any peril except collision or overturn or a peril specifically excluded.
[q] Specified Causes of Loss coverage
[a] A type of basic physical damage coverage offered under the BACF. This coverage insures 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.
[q] Towing and labor coverage
[a] An optional coverage under the BACF. This coverage pays for necessary towing and labor costs due to the disablement of a covered private passenger auto.
[q] Transportation Expenses coverage extension
[a] A coverage extension under the BACF. Covers substitute transportation costs incurred when a private-passenger-type auto has been stolen.
[q] Loss of Use Expenses coverage extension
[a] A coverage extension under the BACF. Covers loss of use of a rental auto when an insured becomes contractually obligated to make such payments.
[q] Auto Medical Payments Coverage endorsement
[a] An endorsement to the BACF that provides a prompt source of medical expense reimbursement for the insured and other persons injured in auto accidents. No-fault coverage.
[q] Personal Injury Protection coverage
[a] Coverage in a BACF that provides first-party benefits to injured persons, regardless of fault, for medical expenses, income loss, and other expenses resulting from bodily injury to occupants of a covered auto.
[q] Uninsured Motorist coverage
[a] Coverage under a BACF that covers any person injured by an uninsured motorist while riding in an auto insured under the policy.
[q] Underinsured Motorist coverage
[a] Coverage under a BACF that covers situations in which an at-fault motorist has inadequate insurance.
[q] Appraisal for Physical Damage Losses condition
[a] A loss condition of the BACF that permits the insured and the insurer to ask for an appraisal if the two parties cannot agree on the amount of a covered loss.
[q] Duties in the Event of an Accident condition
[a] A loss condition of the BACF that requires the insured to take several actions after a loss, including giving prompt notice to the insurer.
[q] Legal Actions Against the Insurer condition
[a] A loss condition of the BACF indicating that no legal action can be brought against insurer unless all policy provisions are complied with.
[q] Transfer of Rights Against Others condition
[a] A loss condition of the BACF indicating that if the insurer pays the loss, it’s entitled to take over the insured’s right of recovery from the other party.
[q] Loss Payment – Physical Damage Coverages condition
[a] A loss condition of the BACF that provides the insurer with three options regarding damaged or stolen property:
Pay to repair or replace the property.
Return the property and repair any damage caused by theft.
Take over the property and pay its agreed or appraised value.
[q] Bankruptcy condition
[a] A general condition of the BACF indicating that the bankruptcy or insolvency of the insured does not relieve the insurer of any of its obligations under the policy.
[q] Concealment, Misrepresentation, or Fraud condition
[a] A general condition of the BACF that voids coverage if any insured intentionally conceals or misrepresents a material fact.
[q] Liberalization condition
[a] A general condition of the BACF indicating that during the policy term, if the insurer revises the BACF to provide more coverage at no increase in premium, the insured’s policy will automatically provide that additional coverage.
[q] No Benefit to Bailee – Physical Damage Insurance Only condition
[a] A general condition of the BACF that attempts to preserve the insurer’s right of subrogation by stating that the insurer does not recognize any assignment of coverage or any other grant of coverage to any person or organization that holds, stores, or transports property for a fee.
[q] Premium Audit condition
[a] A general condition of the BACF indicating that the actual premium is determined by a premium audit and is based on actual exposures at the end of the policy period.
[q] Policy Period, Coverage Territory condition
[a] A general condition of the BACF that stipulates the coverage territory is the U.S., Puerto Rico, and Canada.
[q] Two or More Coverage Forms or Policies Issued by the Insurer condition
[a] A general condition of the BACF indicating when a loss is covered by two or more policies issued by the same insurer, the maximum amount the insurer will be required to pay is the highest limit provided under any one policy.
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