Ray's covered car is in the shop for repairs, so he borrows his neighbor's car for a few days and causes an accident. Under Ray's PAP, the borrowed car is:

A car furnished for his regular use

Ricky causes an accident that does $7,000 of damage to his own car. His personal auto policy includes collision coverage with a $1,000 deductible. How much will his insurer pay for his car?

$0, since liability pays only others

A mechanic road-tests a customer's car after repairs and injures a pedestrian. Why does the customer's PAP NOT cover the mechanic?

The auto business exclusion applies

The car was a temporary substitute

He is not a family member of the owner

Mr. Jones is rear-ended by a driver who carries only the state's minimum bodily injury limit of $15,000. Jones's damages are $40,000. Which coverage on his own policy can pay damages above the other driver's limit?

Underinsured motorists coverage

His own bodily injury liability

None; recovery stops at $15,000

Eva uses her own car to run an errand for her employer and injures a pedestrian. The pedestrian sues both Eva and the employer. Under Eva's PAP:

Both Eva and the employer are insureds

Only Eva is an insured, not the employer

Only the employer's policy responds

Judy, the named insured, is struck by a car while walking across a parking lot and breaks her wrist. Which part of her own PAP pays her medical bills regardless of fault?

None, since she wasn't in a car

On vacation, Nina rents a car and declines the rental company's damage waiver. She dents it in a collision. Her PAP shows collision coverage on her own car. For the rental car, her Part D will:

Not cover it, since she doesn't own it

Cover it only if listed on the policy

Cover only other-than-collision losses

Carla drives for a ride-hailing app. While logged into the app and waiting for a ride request, with no passenger aboard, she causes an accident. Under her 2018 PAP, her liability coverage is:

Excluded while she is logged into the app

Covered up to the state minimum limits only

Covered, since business use of a car is allowed

Covered, since no passenger was aboard

Coverage partPersonal lines

Share of general blockabout 8%our synthesis of state exam outlines

Drill18 items

Personal auto policy on the P&C exam

The personal auto policy (ISO PP 00 01 09 18, the 2018 PAP) has six parts: liability in Part A, medical payments in Part B, uninsured motorists in Part C, damage to your auto in Part D, duties after an accident in Part E and general provisions in Part F. Each part has its own insureds and exclusions, and the 2018 edition raised the transportation allowance to $30 a day, up to $900.

Parts A through F

Part A, Liability: Bodily injury and property damage an insured is legally responsible for in an auto accident, on split limits such as 250/500/150 or one combined single limit. Defense and supplementary payments are paid on top; the duty to defend ends when the limit is used up.
Part B, Medical payments: Reasonable medical and funeral expenses incurred within three years of the accident, regardless of fault. Excludes vehicles with fewer than four wheels.
Part C, Uninsured motorists: Bodily injury an insured is legally entitled to recover from an uninsured driver, a hit-and-run driver whose vehicle hits the insured or the insured's car, or a driver whose insurer is insolvent. Underinsured motorists coverage sits beside it, defined differently from state to state.
Part D, Damage to your auto: Collision and other than collision (OTC), each with its own deductible, paid at the lesser of ACV or repair cost. Transportation expenses of $30 a day, up to $900, with no deductible.
Part E, Duties after an accident or loss: Prompt notice, cooperation, medical exams and an examination under oath when asked, and police notice for a hit-and-run or a theft.
Part F, General provisions: Policy territory, cancellation and nonrenewal, other insurance, and the rule that conforms the limits to another state's requirements.

Who is an insured, and which car counts

Coverage starts with the person, then the car. The named insured and family members are insured in any auto, owned or not. A family member is a resident of the household related to the named insured by blood, marriage or adoption, including a ward or foster child. Anyone else is insured only while using your covered auto. A driver with no reasonable belief that they may use the car is excluded, but the exclusion does not reach a family member driving a car the named insured owns.

“You” also keeps a spouse who has moved out of the household, until the earliest of 90 days, a policy of their own, or the end of the policy period.

Your covered auto has four doors in: a vehicle shown on the declarations; a newly acquired auto; a trailer you own; and a temporary substitute, which is a non-owned auto standing in for a covered auto out of use for breakdown, repair, servicing, loss or destruction. For a newly acquired auto, Parts A through C need notice within 14 days. Part D needs notice within 14 days if another auto already carries physical damage coverage, and within 4 days if none does, with a $500 deductible on a loss before notice. A car leased under a written agreement of six months or more counts as owned.

Where the $250,000 per-person cap bites

WorksheetSplit limits

Limits 250/500/150; two people hurt ($310,000 and $180,000); a $185,000 storefront damaged

Bodily injury, each person: $250,000
Bodily injury, each accident: $500,000
Property damage, each accident: $150,000

Person 1lesser of $310,000 and $250,000$250,000
Person 2lesser of $180,000 and $250,000$180,000
Bodily injury vs $500,000$250,000 + $180,000$430,000
Property damagelesser of $185,000 and $150,000$150,000

Policy pays$580,000

The driver owes the uncovered $95,000 ($60,000 of bodily injury and $35,000 of property damage). The per-accident limit never lifts the per-person cap.

Collision or other than collision

Part D of the 2018 PAP: how common losses are classified
Loss	Part D coverage	Why
Car hits a tree	Collision	Impact with an object
Car rolls over into a ditch	Collision	Upset counts as collision
Car hits a deer	OTC	Contact with a bird or animal is listed under OTC
Hail dents the roof	OTC	Hail is a named OTC cause
A limb falls on a parked car	OTC	Falling object
A stone cracks the windshield	OTC	Glass breakage; in a collision the insured may treat it as collision
Car is stolen	OTC	Theft; transportation expenses start 48 hours later

Which part, which insured, which limit

0 of 18 answered · 0 right

Place each loss in a part of the policy first; the dollar figures only make sense once you know whose property or body was hurt.

Notes on each optionCommit to an answer first. The notes under the item then open on every option: what rules it in or out, and the one word that splits the runner-up from the key.

Item 01
Ray's covered car is in the shop for repairs, so he borrows his neighbor's car for a few days and causes an accident. Under Ray's PAP, the borrowed car is:
1. AA newly acquired auto is one Ray buys or leases during the policy period, not a car he borrows.
2. BBorrowing a car for a few days is not regular use; a car furnished for regular use would be excluded.
3. CThe borrowed car is not excluded because it stands in for Ray's covered car while that car is in the shop.
4. DCorrect: a non-owned car used while the covered auto is out of use for repair is a temporary substitute, so it counts as Ray's covered auto (his coverage is excess over the neighbor's).
More notes ↓
Item 02
Ricky causes an accident that does $7,000 of damage to his own car. His personal auto policy includes collision coverage with a $1,000 deductible. How much will his insurer pay for his car?
1. ALiability does pay only others, but Ricky's collision coverage is what responds to his own car.
2. BCorrect: collision pays for damage to his own car regardless of fault, $7,000 − $1,000 deductible = $6,000.
3. C$7,000 forgets to subtract the $1,000 collision deductible.
4. DFault does not bar a collision claim; that is the whole point of first-party physical damage coverage.
More notes ↓
Item 03
A mechanic road-tests a customer's car after repairs and injures a pedestrian. Why does the customer's PAP NOT cover the mechanic?
1. AThe PAP has no listed-driver requirement; a permissive user does not need to be listed.
2. BCorrect: Part A excludes anyone employed in the business of repairing or servicing vehicles, which includes a mechanic road-testing a customer's car.
3. CA temporary substitute is a car the insured borrows while his own is out of use, which is not this situation.
4. DA permissive user does not need to be a family member to be covered under Part A.
More notes ↓
Item 04
Mr. Jones is rear-ended by a driver who carries only the state's minimum bodily injury limit of $15,000. Jones's damages are $40,000. Which coverage on his own policy can pay damages above the other driver's limit?
1. AUM does not apply because the other driver carries the state minimum, so the car is not uninsured under the PAP definition.
2. BJones's own bodily injury liability pays people he injures, never himself.
3. CRecovery does not stop at $15,000 if Jones carries underinsured motorists coverage.
4. DCorrect: underinsured motorists coverage pays when the at-fault driver is insured but carries too little to cover the damages.
More notes ↓
Item 05
Eva uses her own car to run an errand for her employer and injures a pedestrian. The pedestrian sues both Eva and the employer. Under Eva's PAP:
1. APart A also insures any person or organization for its legal responsibility for an insured's acts in a covered auto, so the employer is included.
2. BCorrect: Eva is an insured, and her employer is an insured for its vicarious liability for her use of her covered auto.
3. CEva's PAP is primary on her own car; any employer non-owned auto coverage would usually be excess.
4. DThe business-use exclusion does not apply to a private passenger auto, so running an errand is covered.
More notes ↓
Item 06
Judy, the named insured, is struck by a car while walking across a parking lot and breaks her wrist. Which part of her own PAP pays her medical bills regardless of fault?
1. APart C pays only when an uninsured driver is legally liable, so it is not the regardless-of-fault coverage.
2. BCorrect: Part B pays the named insured's medical bills, regardless of fault, when she is struck as a pedestrian by a motor vehicle.
3. CPart A liability pays people the insured injures, not the insured herself.
4. DPart B covers the named insured as a pedestrian struck by a vehicle, so she need not be in a car.
More notes ↓
Item 07
On vacation, Nina rents a car and declines the rental company's damage waiver. She dents it in a collision. Her PAP shows collision coverage on her own car. For the rental car, her Part D will:
1. AOwnership is not required; a rental in Nina's custody is a non-owned auto.
2. BA non-owned auto does not need to be listed; that is the point of non-owned coverage.
3. CPart D gives a non-owned auto the broadest coverage on any auto in the declarations, which includes collision here.
4. DCorrect: a rental car is a non-owned auto, and Part D gives it the broadest coverage on any covered auto (here collision), excess over other recovery.
More notes ↓
Item 08
Carla drives for a ride-hailing app. While logged into the app and waiting for a ride request, with no passenger aboard, she causes an accident. Under her 2018 PAP, her liability coverage is:
1. ACorrect: the 2018 PAP excludes liability for any time an insured is logged into a transportation network platform as a driver, with or without a passenger.
2. BThere is no state-minimum carve-out in this exclusion; coverage is excluded outright.
3. CThe general business-use exclusion does not reach private passenger autos, but the separate livery/TNC exclusion still does.
4. D'No passenger aboard' is the trap; the 2018 wording applies whether or not a passenger is in the car.
More notes ↓
Item 09
Under the PAP, which trip would be OUTSIDE the policy territory?
1. APuerto Rico is expressly within the PAP policy territory.
2. BGuam is a U.S. territory, and U.S. territories and possessions are inside the policy territory.
3. CCorrect: Mexico is outside the PAP policy territory, so drivers need a Mexican auto policy.
4. DCanada is expressly included in the PAP policy territory.
More notes ↓
Item 10
Alan has PAP limits of 50/100/25. He injures three people whose damages are $70,000, $40,000 and $30,000. How much will his policy pay for bodily injury?
1. A$120,000 applies the $50,000 per-person cap but forgets the $100,000 per-accident cap.
2. B$140,000 ignores both caps and simply adds the three damage amounts.
3. C$50,000 is only the per-person limit, as if just one person were hurt.
4. DCorrect: per-person caps give $50,000 + $40,000 + $30,000 = $120,000, which the $100,000 per-accident limit then cuts to $100,000.
More notes ↓
Item 11
In a modified no-fault state, when may an injured driver sue the at-fault driver for pain and suffering?
1. A'Never' describes pure no-fault, not a modified plan with a tort threshold.
2. BThe other driver's insurance status has nothing to do with the right to sue under no-fault.
3. CCorrect: modified no-fault lets an injured person sue for pain and suffering once the injury exceeds the monetary or verbal threshold.
4. D'No-fault only adds benefits' describes an add-on state, not a modified no-fault state.
More notes ↓
Item 12
An unidentified driver forces Maya's car off the road without touching it, and she is injured. Under the standard PAP definition, why may Part C NOT apply?
1. ACorrect: the standard PAP counts a hit-and-run vehicle as uninsured only if it actually hits the insured, her car or a vehicle she occupies, so a no-contact 'miss-and-run' fails the definition.
2. BLimits below the state minimum are only one of several ways a vehicle qualifies as uninsured.
3. CPAP UM is bodily injury coverage, so this has it backward.
4. DThe insured does not have to sue an unknown driver first; the problem is the lack of physical contact.
More notes ↓
Item 13
A financial responsibility law generally requires a driver to:
1. ACorrect: a financial responsibility law requires proof of ability to pay damages after an accident or certain violations.
2. BCollecting benefits regardless of fault describes no-fault/PIP, not financial responsibility.
3. CRequiring insurance before registering a car is a compulsory insurance law, not a financial responsibility law.
4. DUM coverage requirements are separate rules in some states, not what a financial responsibility law does.
More notes ↓
Item 14
After an auto accident, all of the following are duties of a person seeking coverage under the PAP EXCEPT:
1. ACorrect: the insured must submit to physical exams by doctors the insurer picks, but the PAP says the insurer pays for them.
2. BCooperating in the investigation, settlement or defense is a listed Part E duty.
3. CPromptly sending copies of notices and legal papers is a listed Part E duty.
4. DAllowing the insurer to inspect and appraise the damaged car is a listed duty.
More notes ↓
Item 15
Ben lives in a no-fault state. His auto policy has liability limits of 15/30/10, PIP, and collision with a $500 deductible. He slides into a utility pole, causing $7,000 of damage to his own car. How is the damage paid?
1. ALiability, including its $10,000 property damage limit, pays for damage to others' property, never Ben's own car.
2. BCorrect: damage to his own car is a collision loss, so collision pays $7,000 − $500 = $6,500.
3. CPIP pays first-party injury costs such as medical bills and lost wages, not vehicle damage.
4. DLiability never pays for the insured's own car, and $7,000 also skips the deductible.
More notes ↓
Item 16
Under the personal auto policy, which disagreement may be settled by arbitration if both parties agree?
1. AA dispute over the amount of a physical damage loss goes to appraisal, not arbitration, which is the usual trap.
2. BCorrect: PAP arbitration applies to Part C, covering whether the insured is legally entitled to recover from the uninsured driver and how much.
3. CWhether the policy was properly canceled is a coverage question, and coverage questions are not arbitrated.
4. DWho counts as a family member is a coverage question, not a Part C arbitration issue.
More notes ↓
Item 17
A thief takes an aftermarket sound system permanently installed in a dashboard location the manufacturer did not use. The PAP has other than collision coverage. The most Part D will pay for the system is:
1. A$500 is a near-miss figure with no basis in the PAP electronics limit.
2. B$1,500 is the PAP figure for custom equipment and non-owned trailers, not for electronics.
3. CPermanently installed electronics are not excluded outright; only equipment that is not permanently installed is.
4. DCorrect: the PAP pays up to $1,000 for electronics permanently installed in a location the manufacturer did not use.
More notes ↓
Item 18
Lee's PAP has 25/50/10 limits in his home state. While driving in a state that requires 50/100/25, he causes an accident. His policy will:
1. ACorrect: the PAP out-of-state provision automatically raises the limits to what the state where the accident happens requires.
2. BHis own 25/50/10 limits would fall short, and the out-of-state provision fixes exactly that.
3. CThe policy territory covers the whole U.S., its territories and possessions, Puerto Rico and Canada, not just his home state.
4. DThe out-of-state provision raises every limit the other state requires, not only property damage.
More notes ↓

Mixed practice test · Timed mock

Dollar figures in the 2018 PAP

From ISO PP 00 01 09 18. The 2005 form used lower figures, and insurers or states can change them.
Item	2018 PAP	Where
Bail bonds	Up to $250	Part A supplementary payments
Loss of earnings for attending hearings or trials	Up to $250 a day	Part A supplementary payments
Transportation expenses	$30 a day, up to $900	Part D, no deductible
When transportation pay starts	48 hours after a theft; after 24 hours out of use otherwise	Part D
Non-owned trailer	Up to $1,500	Part D
Insurer's notice: nonpayment or first 60 days	10 days	Part F cancellation
Insurer's notice: other cancellation; nonrenewal	20 days	Part F

The laws around the policy

Financial responsibility laws look backward: they make a driver show the ability to pay after an accident or a conviction. Compulsory insurance laws look forward and require coverage before the car is driven. Part F ties the PAP to both: when the insured drives in a state whose required limits exceed the policy's, the policy provides the required limits there.

No-fault systems pay first-party benefits through personal injury protection (PIP): medical expenses, lost wages, essential services and funeral costs, regardless of fault. In exchange, the right to sue for pain and suffering is limited until a monetary or verbal threshold is crossed. Add-on states pay the benefits without limiting suits. The details vary by state, and the general block tests only the concept. No-fault never removes property damage liability; a parked car the insured dents is still a Part A claim. The tort rules underneath Part A are on liability insurance basics.

Business use is where the PAP hands off. It excludes an auto used as a public or livery conveyance and, in the 2018 edition, any time the driver is logged into a transportation network platform, with exceptions for share-the-expense car pools and volunteer use. Autos a business owns go on the business auto coverage form, covered in commercial auto.

Personal auto edge cases

Are limits stacked when two cars are on one PAP?

No. The limit shown is the most the policy pays for one accident, regardless of the number of autos, premiums or claims involved.

Does the PAP cover a motorcycle?

Not for liability or medical payments: Parts A and B exclude vehicles with fewer than four wheels. A motorcycle needs its own policy or an endorsement written for it.

Does the insured's own deductible apply to transportation expenses?

No. The 2018 PAP pays them, at $30 a day up to $900, with no deductible, once the waiting period after the loss has run.

AParts A through F

BWho is an insured, and which car counts

CWhere the $250,000 per-person cap bites

DCollision or other than collision

EWhich part, which insured, which limit

FDollar figures in the 2018 PAP

GThe laws around the policy

HPersonal auto edge cases