Personal Auto PolicyQuestion 405 of 474
Physical damage coverage on a personal auto policy is best described as:
a.Coverage every policy must include by federal law
b.Coverage that pays the loan balance rather than value
c.Optional coverage that a lienholder requires
d.Coverage automatically added when a car is financed
Explanation
Collision and other-than-collision are separate optional purchases, but a lender financing the car requires them and is shown as a loss payee on the declarations. There is no federal mandate to buy them; auto insurance requirements are set at state level. The insurer owes the value of the damaged auto, not whatever is left on the loan.
This topic, taught in full in the Personal Lines Insurance Producer guide. Personal Lines Insurance Producer — Complete Study Guide (2026) — PDF + EPUB, $19.99 · 14-day refund →
Practice all 474 questions free — no signup required.
Own the complete Personal Lines Insurance Producer guide — PDF + EPUB, $19.99 →
Related questions on this topic
- A rock thrown up by a passing truck cracks the insured's windshield. Under Part D this loss is:
- Rising flood water fills the insured's parked car and ruins it. Under a personal auto policy carrying both physical damage coverages, the loss is:
- Vandals scratch the paint and slash the seats of a parked car, causing $1,250 in damage. The auto carries a $250 other-than-collision deductible. The insurer pays:
- Repairing the insured's car after an at-fault collision would cost $9,400, but the car's actual cash value is $8,000. With a $500 collision deductible, the insurer pays:
- In one policy year an insured has a $2,000 hail loss and, four months later, a $3,000 collision loss. Deductibles are $250 other than collision and $500 collision. The insurer pays in total:
- The insured's car is stolen and never recovered. Its actual cash value at the time of the theft is $14,000 and the other-than-collision deductible is $250. The insurer pays:
Last reviewed: · editorial process
PrepPass team · Verified against California Personal Lines Insurance License Exam · How we review