Analysis and Evaluation of Risk Exposure - Personal Vehicle Insurance and Risks
The personal auto policy (PAP) can be written on eligible vehicles owned and leased by an individual or by a husband or wife residing in the same household. A vehicle rented to others for public use is not eligible and must be insured under a commercial policy.
Most vehicles such as cars, mini-vans, and sport utility vehicles are eligible for a personal auto policy. If vans, trucks, or other types of large vehicles are used for transportation or delivery of good and materials they typically are disqualified for a personal auto policy.
The risk exposures that must be considered when evaluating a PAP include the following:
- Damage done to someone else's body or property
- Medical expenses involved
- Repair of your own vehicle in an accident
- Accidents involving uninsured motorists
- Temporary insurance on rental cars used while on vacation
- Rental car reimbursement for an accident or longer term service issues
Which of the following vehicles would be covered under Kevin's personal auto policy?
I. A pickup truck that he uses in his business for deliveries
II. A new car that was purchased last week
III. His son's car listed on a separate insurance policy
IV. A car rented by Kevin for the family vacation
A. I and II only
B. II and III only
C. III and IV only
D. II and IV only
Trucks used for business delivery are insured under commercial vehicle policies. Since Kevin's son has a separate insurance policy, he would not be covered under Kevin's personal auto policy.