Your USA Auto Insurance Policy: Things To Know Multiple Choice Quiz | World

Quiz Answer Key and Fun Facts

1. Assuming you have coverage that protects your car in the event that it gets damaged, this scenario unfolds... You are driving home from work late one night and a deer jumps out in front of your car. You attempt to avoid it but hit the deer. The animal is ok but your car is not. You call your insurance company on your cell phone and your car gets towed away. What coverage will your claim be handled under?

Answer: Comprehensive

If you have physical damage coverage for your car, there are two types of coverages: collision and comprehensive (also called OTC or Other Than Collision). It is a bit of a misnomer because collision with an animal or bird is one of the criteria for a comprehensive claim. Fire, theft, and missiles (falling debris) are other examples of where your car would be handled under comprehensive coverage. Anything else would be collision (as long as another vehicle or person collided with your car).

2. You are driving down the road at about 55 MPH. The speed limit is 45. It is a one-lane road in each direction. As you come to an intersection, your light is green so you do not hit the brakes. There is another driver heading in the opposite direction. Suddenly, without warning, he takes a left in front of you. You attempt to swerve but hit him. The police come out and ticket the other driver for "failure to yield right of way". Will his insurance company definitely owe for your damages, assuming that he is covered?

Answer: No

First of all, every state in America has different laws about "shared" negligence. In this scenario, you may have been able to avoid the accident had you not been speeding. The police were not witnesses to the accident either, so their report and ticket is a guide for the insurance adjusters but is not the determining factor.

In states where the laws are of "Contributory Negligence", a driver that is even 1% negligent is barred from recovery from another carrier. In "Comparative Negligence" states, the adjusters of the two companies decide on a percentage of faults for each party. For instance, you may be found to be 20% at fault due to excess speed and can recoup 80% of your damages.

There are even more complicated laws in other states, but I think that is enough for now.

3. There are times when insurance companies cannot agree on a determination of who is at fault in an accident or what percentage of negligence lies with either party. In these instances, some insurance companies each state their case using the evidence gathered in their investigation and write up contention sheets. They then submit these sheets to a forum which makes a binding decision on liability. What is this called?

Answer: Arbitration

Many companies, especially the notable ones such as Allstate and State Farm are members of arbitration. The main company is in Atlanta, Georgia and is named "Arbitration Forums." Whatever they decide is what the final verdict will be.

4. Most people have a certain amount of money that they have to pay before the insurance company will kick in any money to repair their car. Usual amounts range from $250 to $500 to even $1000. What is this called in the US?

Answer: Deductible

You choose your deductible when you buy your insurance policy. The higher the deductible, the lower your insurance premiums usually are. However, if your car gets sideswiped or you hit a tree, you should be aware of how much out of pocket money you will have to pay a body shop or dealership before picking up your repaired vehicle.

5. An appraiser from your insurance company comes out to look at your car after you rear-ended someone at a red light. The whole front end is smashed in. You have had this car for a while and it has sentimental value to you, but according to the appraiser is just a 1989 Honda Civic. The amount of money it would take to fix the car is more than the car is worth. He tells you that your car is a total loss. Is there a scenario where you can keep your car?

Answer: Yes

This is on a case-by-case basis but depending on the insurance company, the state you reside in, and whether or not you own the car outright (no liens), there are ways to keep your car. Once a car is determined to be a total loss, it is now considered to be a piece of salvage. One option may include owner retaining your salvage, where the insurance company figures out how much money it would have made by selling the car for a salvage bid and subtracting that from your settlement.

Another is a "Contract Repair".

This is when the cost of fixing your car is at least 80% of what the car is worth, but is still "fixable". If you can find a body shop or dealership to fix it at a certain price, the insurance company may pay a one-time fee and get you to sign a release.

The problem with that is that if more damage is found, you are out of luck.

6. Speaking of finding more damage, let's say the appraiser writes up an estimate on your 1999 Saturn SL2 for $1300. After they cut you a check, your body shop tears down the car and finds suspension damage. The shop then calls the appraiser to come back out. What is the process called when a second estimate is written in an attempt to get an agreed price between the insurance company and the body shop?

Answer: Supplement

While the other answers may seem to be viable, this process is called a supplement. It happens more often than not because an appraiser can only write what he can see with his naked eye the first time around. A good rule of thumb is to leave room for a possible supplement when appraising a car in the event that the extra damage will end up totaling the vehicle.

7. Injuries! Injuries! Injuries! So far, we have discussed an injured auto, but what about injured people? Liability insurance is what you have to protect yourself from a financial hit if you strike someone else and are found to be negligent. What is the term for the coverage that, up to its limit, will pay for the injuries sustained to people as a result of your negligence?

Answer: Bodily Injury (BI)

Liability insurance breaks down into two coverages: property damage (PD) and bodily injury (BI). The Toyota Camry that you hit will be paid for by your property damage coverage and the driver of the vehicle that went to the hospital and then went to physical therapy for a few months will be taken care of by your bodily injury coverage. BI is not required in all states.

However, it is a big risk to take, if you live in a state that does not require BI and you injure someone. Many people get an attorney and they will come directly after you and your assets.

This is the branch of claims that I currently work in. I talk to attorneys all day long. Are you jealous? :)

8. Someone rear ends your nice new 2002 Volkswagen Jetta and after it gets appraised, it is determined it will take 3 days for a body shop to repair it. You need a rental car. What are you owed by the adverse insurance company?

Answer: Loss of Use

No insurance companies have to set you up with a rental agency. This is a wide misconception. Most companies do this however and have contracts with companies such as Enterprise. However, all that is owed is the lost time that it will take while your car is being repaired.

This is calculated by the amount of labor hours on the estimate by the number of hours that the shop is allotted to working on the car per day. In other words, if there were 35 labor hours (body and paint) and the shop works on each car for 5 hours a day, this would be 7 days loss of use or LOU.

The company should pay you for a comparable vehicle for those days (and shops don't work on weekends, so that is 2 extra days), making it 9 days. If they pay you $30 a day for 9 days, for instance, you get a separate check for $270, besides the check to fix your car. LOU is also under your property damage coverage.

9. You are not paying attention and run a red light and smash into 4 cars in the middle of a busy intersection. There were 3 passengers in one car, 2 in another, and 5 in another. Luckily, one of the four cars only had a driver. You are found to be responsible for 4 property damage losses and 14 bodily injury losses (4 drivers and 10 passengers). The limits you chose for your policy is $25,000/$50,000 for bodily injury (per person/total amount of people) and $50,000 for property damage. Everyone gets attorneys and all four cars are totaled. No one is happy about it, but they all go through their own insurance policies to get their cars fixed. When their companies are finished with the payments, they will look to your company for reimbursement. What is this process called?

Answer: Subrogation

Having coverage for your own vehicle is important even if you are not at fault, like the cars in the intersection in this example. They may have to pay their deductibles, but their cars can get fixed and then the insurance companies retain the right to be reimbursed.

As for the injuries, you better find yourself a good attorney that can work out a payment program. Once the insurance company has exhausted its limit in liability (PD and BI), they are no longer obligated to defend you. This situation is called an "excess situation" and many times the companies, defense attorneys, and plaintiff attorneys will attempt to come up with a "pro-rata" plan that indemnifies their clients or policy holders the best that they can.

This is why it is important to have higher liability limits or to combine limits into an "Umbrella policy".

10. As if I haven't confused you or bored you enough, what happens if a car with no insurance hits you? There are some states where it is still not mandatory to carry insurance. In any event, even in states where you are supposed to have insurance, people drive around without it. What is the name of the coverage that you can purchase to protect you against this hazard?

Answer: Uninsured Motorist

Uninsured Motorist (or UM) is mandatory in some states and not in others. In the event that you are hit by someone who is uninsured or UNDERinsured like in the last example, your insurance company would treat you like a person that you hit. There is UMPD and UMBI (uninsured motorist for property damage and uninsured motorist for bodily injury). Usually, they have higher limits and smaller deductibles. Again, it is case by case whether or not your state even has such coverages available (UMPD is only in certain states). "Full coverage" is a misnomer because no one is EVER fully covered.

There are exclusions in your policy, deductibles, limits on coverages, as well as many other situations where you will have to come up with out of pocket money. Do not let anyone fool you into thinking that you have "Full Coverage".

Source: Author superferd

This quiz was reviewed by FunTrivia editor Exit10 before going online.
Any errors found in FunTrivia content are routinely corrected through our feedback system.

Your USA Auto Insurance Policy: Things To Know Quiz

My goal is to become a writer. In the meantime, in order to feed myself and build a savings account, I have a "real job". I am a claims adjuster for automobile insurance. Here is a small quiz about your policy and what to do in case an accident occurs.

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