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Exam 23: Auto Insurance and Society

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Question 1

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Disadvantages of automobile insurance plans include which of the following? I.High premiums may cause many high-risk drivers to go uninsured. II.Large underwriting profits have resulted in high-risk drivers subsidizing the cost of insurance for good drivers in the voluntary markets.

A) I only
B) II only
C) both I and II
D) neither I nor II

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Question 2

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All of the following are major rating factors for determining private passenger automobile insurance premiums EXCEPT

A) gender.
B) age.
C) race.
D) marital status.

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Question 3

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Which of the following statements about shopping for auto insurance is true?

Amber believes that her auto insurance premium is too high.Which of the following would most likely lower Amber's premium?

Which of the following statements about the characteristics of current no-fault laws is true?

Sharon lives in a state that has a no-fault automobile insurance law.Under the law,an injured person has the right to sue the negligent driver only if the bodily injury claim exceeds a dollar or verbal threshold.The no-fault law in Sharon's state is a(n)

The residual market for auto insurance is designed to provide insurance to

Bill was severely injured by an uninsured driver.Bill did not purchase uninsured motorists coverage,and the other driver,although held liable,could not pay the damages awarded.After exhausting all sources of recovery,Bill obtained some relief from a state fund designed to compensate individuals like Bill.These state funds are called

Which of the following statements is (are) true with respect to the use of credit-based insurance scores as an auto insurance rating factor? I.Insurers claim that drivers who have poor insurance scores are expected to have relatively more accidents. II.The use of insurance scores in personal lines underwriting is controversial.

Under financial responsibility laws,proof of financial responsibility is generally required under which of the following circumstances?

Which of the following statements about joint underwriting associations for insuring high-risk drivers is (are) true? I.Underwriting losses are proportionately shared by all auto insurers based on premiums written in the state. II.Each company participating in a joint underwriting association sets it own rates.

Some states have enacted laws which prohibit uninsured drivers from suing a negligent driver for noneconomic damages,such as pain and suffering.These laws are called

Criticisms of compulsory insurance laws include which of the following? I.They provide less than complete protection since they require only a minimum amount of liability insurance. II.Even with compulsory insurance laws,a substantial number of motorists continue to operate vehicles without insurance.

Defects of financial responsibility laws include which of the following? I.Accident victims may not be fully compensated for their injuries. II.They apply only to property damage losses,not to bodily injury claims.

In Maryland,drivers who are unable to obtain auto insurance in the voluntary market are insured through a(n)

In the state where Susan lives,drivers whom private insurance companies do not want to insure are placed in a common pool,and each insurer pays its pro rata share of pool losses and expenses.A common policy is used for all high-risk drivers.Susan's state handles high-risk drivers through a(n)

The multi-car discount is based on the assumption that

New Jersey's dollar-a-day auto insurance coverage is limited to

Which of the following statements is true with respect to a pure no-fault auto insurance plan?

A state law that requires individuals who have been involved in an auto accident or who have been convicted for certain vehicle-related offenses to demonstrate the ability to pay liability claims up to a specified dollar amount is called a(n)