READ FIRST For the following questions, assume that you have the State Farm Car Policy handed out in class, including the coverage and limits shown on the Declarations page Also assume that the 2002 Mazda is the only car you own, unless the question indicates that you purchase another vehicle, and that any situations involving borrowing cars is done with permission, unless otherwise stated, and that you are willing to pay any additional premiums due for vehicle changes For each situation, calculate how much your insurance policy would pay, in total Unless otherwise indicated, assume the loss occurs during the policy period Do not assume facts not given in the question DECLARATIONS PAGE State Farm Mutual Automobile Insurance Company 2702 Ireland Grove Rd Bloomington, IL 61709 Policy Number S020591 17F Policy Period August 13, 2006 February 4, 2007 Named Insured FIL 250 Student 194 Main Street Normal, IL 61790 YEAR 2002 SYMBOLS MAKE Mazda MODEL V6 BODY STYLE 4DR VEHICLE ID 1YVHP84D065M71234 COVERAGES CLASS 1A0011AF PREMIUMS A Bodily Injury Property Damage Liability Limits of Liability Coverage A Bodily Injury Each Person Each Accident $100,000 $300,000 Limits of Liability Coverage A Property Damage Each Accident $100,000 C Medical Payments Limit of Liability Coverage C Each Person $25,000 10 08 D Comprehensive 74 84 G 100 $100 Deductible Collision 198 39 H Emergency Road Service 5 01 U Uninsured Motor Vehicle Limits of Liability U Each Person Each Accident $100,000 $300,000 7 00 W Underinsured Motor Vehicle Limits of Liability W Each Person Each Accident $100,000 $300,000 7 40 Total Premium for This Policy Period 143 36 $446 08 IMPORTANT MESSAGES Your policy consists of this declarations page, the policy booklet form 9913A, and any endorsements that apply, including those issued to you with any subsequent renewal notice After pumping gas, you forget to remove the hose from your gas tank As you drive off the hose breaks, spilling some gasoline and starting a fire The fire causes $325,000 in damage to the gas station You are held responsible for the entire loss Your policy will pay A 0 B $100,000 C $300,000 D $325,000 E None of the above You start backing out of your garage before the garage door is fully up The top of your car hits the garage door, breaking the door and damaging your car It costs $1100 to repair your car and $1600 to repair the garage door Your policy will pay A 0 B $1,100 C $1,600 D $2,600 E $1,000 Late one night, you are driving home when you run into another car injuring the driver of the other car and damaging both cars The accident is your fault The other driver wins a bodily injury award of $20,000 It costs $2600 to repair your car and $4000 to repair the other car Your policy will pay A 0 B $24,000 C $26,500 D $28,000 E None of the above You park your car on Sixth Street and walk over to the quad for lunch While crossing Wright Street, you are hit by a bicyclist and knocked to the ground You hit your head so hard you are knocked out When you wake up, the person who hit you is gone You incur $45,000 in medical bills The person who hit you would be liable for $150,000 in damages if you could find them Your policy will pay A 0 B $25,000 C $45,000 D $125,000 E None of the above You are driving your car when you run into 2007 Rolls Royce, seriously injuring the driver and a passenger Each of them sues you and wins a bodily injury award of $250,000 You are also liable for the damage you caused to the Rolls Royce, which costs $175,000 to repair Your policy will pay A 0 B $300,000 C $400,000 D $475,000 E None of the above Your car develops a loud engine knock When you bring it to the repair shop, they tell you the engine valves need to be replaced and you have to leave your car there for three days for repairs You rent a car for $30 a day It costs $700 for the repair work Your policy will pay A 0 B $75 C $600 D $775 E None of the above You are visiting New Orleans when another hurricane hits, causing Lake Pontchartrain to overflow the levies and flood the city again Your car, which contains your laptop, is damaged in the flooding It costs $7500 to repair your car Your laptop, valued at $900, is damaged beyond repair Your policy will pay A 0 B $7,500 C $8,400 D $8,300 E None of the above You are walking in the financial district of New York City on your way to an interview with Deloitte Touche As you cross the street, you are hit by an uninsured driver You incur a medical bill of $300,000 You would be entitled to a bodily injury award of $600,000 if the cab driver had been insured Your policy will pay A 0 B $100,000 C $125,000 D $600,000 E None of the above While driving your car, you are hit by another car Your car is damaged and you are seriously injured You incur $15,000 in medical bills You would be entitled to collect a bodily injury award of $45,000, but the driver only has 20 40 15 liability limits Your policy will pay A 0 B $15,000 C $25,000 D $50,000 E None of the above You are driving your car when you run into the back of a bus, causing it to leave the road and land in a ditch Ten people on the bus are injured, and each wins a bodily injury award against you for $25,000 It costs $140,000 to repair the bus and $8,100 to repair your car Your policy will pay A $133,000 B $358,000 C $398,000 D $408,000 E None of the above Please read Ihe policy carefully If Ihere is an accident, contact your State Farm agent or one of our Claim Offices al once (See INSURED'S DUTIES in Ihis policy booklet ) SPECIMEN State Farm Personal Auto Policy Booklet North Carolina Policy Form 9833P 8 AGREEMENT In return for payment of the premium and subject to all the terms of this policy, we agree with you as follows DEFINITIONS Throughout this policy, you and your refer to I The named insured shown in the Declarations and 2 The spouse if a resident of the same household We , us and our refer to the Company providing this insurance For the purposes of this polic Y a private passenger type auto, pickup or van sha iI tie deemed to be owned by a person if leased I Under a written agreement to that person and 2 For a continuous period of at least 6 months Other words and Ilhrases are defined They are boldfaced when useC Bodily injury means bodily harm, sickness or disease, includmg death that results Business means trade, profession or occupation Family member means a person related to you by blood, marriage or adoption who is a resident of your household This includes a ward or foster child Occupying means in upon getting in, on, out or ofT Property damage means physical injury to, destruction of, or loss of use of tangible property Trailer means a vehicle designed to be pulled by a I Private passenger auto or station wagon type or 2 Pickup truck or van lt also means a farm wagon or farm implement while pulled by a vehicle listed in 1 or 2 abOve Your covered auto means I Any vehicle shown in the Declarations 2 A newly acquired auto 3 Any trailer you own 4 Any auto or trailer not owned by you while used as a temporary substitute for any other vehicle described in this definition which is out of normal use because of its a breakdown NC 00010605 b repair c servicing d loss or e destruction This provision (4 ) does not apply to Part D Coverage For Damage To Your Auto ''Newly acquired auto means any of the following types of vehicles you become the owner of during the policy period I a private passenger auto or station wagon type or 2 a pickup truck or van that a has a Gross Vehicle Weight as specified by the manufacturer of less than 10,000 pounds and b is not used for the delivery or transportation of goods and materials unless such use is (I) incidental to your business or installing, maintainmg or repairing furnishings or equipment or (2) for farming or ranching Any coverage for a newly acquired auto is subject to the following I If a newly acquired auto replaces a vehicle shown in the Declarations, It will have the same coverage as the vehicle it replaced except that coverage, if any, under Part D Coverage For Damage To Your Auto applies only if you ask us to insure it within 30 days after you become the owner 2 If a newly acquired auto is in addition to any shown in the Declarations, it will have the broadest coverage we now provide for any vehicle shown in the DeclaratIons if you ask us to insure it within 30 days after you become the owner 3 Coverage under this policy terminates lor any newly acquired auto on the effective date anit time of a policy (other than this policy') issued by us or any other company that deSCribes such vehicle on Its declarations page 2 9833P 8 Copyright, North Carolina Rate Bureau, 2005 4 specitied time period described above has elapsed, any coverage we provide for the newly acquired auto will begin at the time you request the coverage You must pay us any added amount due for any coverage we provide for a newly acquired auto If you ask us to insure a newly acquired auto within the applicable specified time period described in I or 2 above any coverage we provide for the newly acquired auto begins on the date you become the O ner If you ask us to insure a newly acquired auto after the applicable PART A LIABILITY COVERAGE INSURING AGREEMENT We will pay damages for bodily injury or property damage for whicn any insured becomes legally responsible because of an auto accident Damages include prejud ment interest awarded against the insured We will settle or defend, as we consider appropriate any claim or suit asking for these damages 1n addition to our limit of liability, we will pay all defense costs we incur Our dut)' to settle or etween an insured and the owner or' operator of the underinsured motor vehicle and ' , 2 Consent to adyancepayment to the insured in equal to the tentative settlement Any jt,ldgment'for damages arisitlg out of a suit is not bmdmg, on us unless we have been served, WIth a copy,of the sUnUnons, comp'laint or other 'process against the uninsured or motorist Insured as ,used in this Part means 1 You or any family member 2 Any other person occupying ' a your, covered auto or b any other auto operated by you 3 Any person for dilmages that person is entitled to recover 'because of bOdilyiniuryto which this coverage applies sus tamed by a person listed in I or 2 above Property daJ llage as used in this Part means injury to or destructIon of I Your covered auto 2 AnYl'roperty owned by a person listed in I or 2 ofmsured lO NCOOOI0605 9833P 8 Copyright North Carolina Rate Bureau, 2005 b a vehicle which you or any family mem' ' ber are occupying or c your covered auto 4 To which a liability bond or policy applies at the time of the accident, but the bonding or insuring company a denies coverage or b is or becomes insolvent However, uninsured motor vehicle does not include any vehicle or equipment 1 Owned by you 2 Owned or operated by a self insurer under any applicable motor vehicle law except a selfinsurer which is or becomes insolvent 3 Owned by a The,United States of America b Canada c a state or d an agency, other than a political subdivi sion of a , b or c above 4 Operated on rails or crawler treads 5 Which is a farm type tractor or equipment designed mainly for use ofT public roads while not on public roads 6 located lor use as a residence or premIses EXCLUSIONS A We do not provide coverage for property damage or bodily injury caused by an uninsured motor vehicle and sustained by any insured I If that Insured or the legal representative settles the bodily injury or 'property damage claim WIthout our written consent 2 While occupying your covered auto while it is used as a public or livery conveyance This exclusion does not apply to a sllare the expensecar pool 3 Using a vehicle without a reasonable belief that that Insured is entitled to do so This Exclusion A 3 does not apply to a family member using your covered auto whicll is owned by you ' ' 4 For the first $ OO of the amount of I roperty damage to the property of each insured as the result of any one accident NC 00 010605 5 If the property is contained in or struck by a motor vehicle (other than)'our 'covered auto) owned by you or any family member ' 6 For any punitive or exemplary damages, or legal costs related thereto , 7 While occupying, or when struck by, any motor vehicle owned by you or any family member which is not Insured for this 'coverage under this policy This includes a of any type used with that vehicle , However, this exclusion does not apply to you or any family member B We do not provide coverage for property damage caused by a hit and run vehicle whose operator or owner cannot be identified C ' We do not provide coverage for bodily InJul')' caused by an underlnsured motor vehicle aniJ sustained by,any insured I Irthat insured or the legal representative settles the bodily injury claim without our consent However tllis exclusion does not apply if we a have been given written notice in advance of a settlcment between an insured and the owner or ollerator of the underlnsured,motor vetilcle and b , we fail ,to advance payment to the insured iii an amount cq,ual to the tentative settlement within thirty days receipt of such written notice 2 While occupying your covered auto while it is bemg used as a public or livery conveyance ThiS exclusion does not apply to a car pool 3 Using a vehicle without reasonable belief that that Insured is entitled to do so This Exclusion C 3 does not apply to a family member using your covered auto which is owned by you 4 For any punitive or exemplary damages, or legal costs related thereto 5 While occ upylng, or when struck by, any motor vehicle owned by you or any family member which is not Insured for this coverage under this policy This includes a trailer of any type used with that vehicle However, this exclusion does not apply to you or any famDy member , 11 9833P 8 Copyright North Carolina Rate Bureau,2005 D This coverage shalJ not apply dir ectly or indi reedy to benefit any insurer or, underany of the fol owingor any similar law I workers' compensation law or 2 disability benefits law LIMIT OF LIABILITY The limit, of bodily injury liability shown in the Declanitions ' for each person for Combined UninsuredlUnderinsured Motorists Coverage is our maximum limit of liability for all damages for bodily injury, including damages for care, loss of services or death, sustained by anyone person in any one accident Subject to' this limit for each person, the limit of bodily injury liability shown in the Declarations for each accident for Combined suredlUnderinsured MotoristsCoveiage is our maximum limit of liability for all damages for bodily injury resulting from anyone accident The limit of property damage liability shown in the Declarations for each accident for Combined UninsuredlUnderinsured Motorists Coverage is our maximum limit of liability for all damages for property damage caused by an uninsured motor vehicle and resulting from anyone accident This is m'ost we will pay bodily Injury and property rega,rdlesSof the number of I Insureds ' ' ' ,' 2 3 , Claims made Vehicles or premiums shown' in tbe Declaraor ' 4 Vehicles involved in the accident The limits of bodily injury liabiJityshown in the Declarations for each person and each accident for this coverage shall be reduced by all sums I, Paid because of the bodily injury by or on behalf of persons or organizations wllo may be legally responsible This includes all sums paid under Part A 2 Paid or payable because of the bodily injury under any workers' compensation law How ever this reduction ,does not apply to the extent that an employer's lien is required to be paid under North Carolina's workers' compensation law and 3 Paid or payable because of the bodily injury under any disability benefits law oraily similar law NC 00010605 The most we will pay for bodily Injury damages to an insured under this coverage IS tl1e lesser of a the limit of bodily injury liability shown in the Declarations fOf each person for this coverage by all sums' described in r items I 2 and 3 of the preceding paragraph or b the damages sustained by the insured for bodily Injury reduced by all sums described in items I , 2 and 3 in the preceding paragraph The limit of property damage liability under this coverage shall be reduced by all sums paid because of the property damage by or on behalf of persons or organizations who may be legally responsible This mcludes all sums payable under Part A No payment will be made for loss paid or payable to insured under Part D or any policy of property IDsurance A lr payment to any person under wll reduce any amount that person IS entItled to recover for the same damages under Part A This coverage is excess over and shall not duplicate any amount paid or payable under Part B OUR RIGHT TO RECOVER PAYMENT A If we make a payment under this coverage and the person to or Ii lf whom payment was made has a right to recover damages from another we shall be subrogated 10 lliat right Further, the execution of a covenant not to enforce judgment by the injured purty shall not preclude us from pursumg our right to sue for or otherwise recover any paymenl made under this coverage from anyone else who may be liable The perso n to or lor whom payment was made 1 hall do J Whatever is necessary to enable LIS to exercise our rights and ' 2 Nothing after loss to prejUdice them However, our rights under ' this ' paragraph do not apply agalOst the owner or operator of an undennsured motor vehicle if we have been given written notice in advance of a settlement and fail to advance payment in an amount equal to the tentative settlement within 30 days following receipt of such notice B If we make a pay ment under this coverage and the person to orfor whom payment is made rccovers damages from anotl1er, thai person shall 1 Hold intrust for us the proceeds of the recovery and ' 2 Reimburse us to the extent of our payment 12 9833P 8 Copyright, North Carolina Rate Bureau, 2005 OTHER INSURANCE If this policy and any other'auto insurance policy apply to the same accident, the maximum amount payable under all applicable policies for all injuries to an insured caused by an uninsured motor vehicle or underinsured motor vehiCle shall be the sum of the highest limit of liability for this coverage under each policy ' n addition, if there is other applicable similar'insurance, we will pay only our share of the loss Our share is the proportion that our limit of liability bearS to the toial Of' all' applicable limits However, anyinsurimce we provide with respect to a vehicle oyer, any other colyou do not own sllttU be lectible insurance ARBITRATION If we and an insured do not agree I Whether that insured is legally entitled to recover compensatory damages from the owner or driver of an uninsured motor vehicle or underinsured motor vehicle or 2 As to amount of such damages the insured, may demand to settle the dispute by arbitration The following procedure will be used 1 Each party will select a competent arbitrator The two so se lected will select a third If the third arbitrator is not selected within 30 days, the insured or we may request ajudge of a court of record to name one The court must be in the county and state in which arbitration is pending 3 'Each party will pay its chosen arbitrator Each will pay half of all other expenses of tion Fees to lawyers a t ld witnesses lU'e not considered arbitration expenses and are to be paid by the party hiring these persons 4 tinles$ the in suredand we agree otherwise, arbitration will take place in the county and state in which the insured lives Arbitration , will be subject to the usual rules of procedure and evidence in such county and state The arbitrators will resolve the issues A written decision on' which two arbitrators agree will be binding on the insured and us 5 Any arbitration action against the company must begin within the time limit allowed for bodily injury or death actions in the state where the accident occurred 2 6 7 Judgment upon award may be entered in any proper court ' As an, alternative, the insured and we may agree to arbitrate by rules other than slated above PART D COVERAGE FOR DAMAGE TO YOUR AUTO l fire or lightning 2 , smoke due to a sudden, unusual and faulty operation of any fixed heating equipment serving the premises to which the auto IS stored 3 the stra nding, S inking, COli iSlon t or derailment oT any conveyance m or on wnich , the auto is being transported Collision means the upset of your covered auto or a non owned auto or their impact with another vehicle or , 'Loss caused by' the following is considered other , than collision l Missiles or falling objects 2 Fire 3 Theft or larceny 4 ' Explosion or earthquake 5 Windstorm , 6 Hail, water or flood 7 Malicious mischief or vandalism INSURING AGREEMENT We will pay for direct and accidental loss to your covered auto o,r any non owned auto, including their equipment Direct and accidental loss does not include any reduction in the value of any vehicle after it has been repllired, as compared to its value before it was damaged We will pay for loss to your covered auto caused by I Other than collision only if the Declarations indicate that Other Than Collision Coverage is provided for that auto 2 Collision only if the Declarations indicate that Collision Coverage iii provided for that auto If there is a loss tO,8 non owned auto, we will provide the broadest coverage applicable to any your covered auto shown in the Declarlltions Our will be reduced by any deductible shown m the Declarations The deductible will not apply to a loss caused by NCOO 0) 0605 13 9833P 8 Copyright, North Carolina Rate Bureau, 2005 8 Ri, t or civil commotion 9 Contact with hiTd'otlirtitrial or 10 Breakage of glasS If loss is caused by contact with a bird or animal, or if breakage of glass is caused by collision, you may elect to Ilave eIther loss considered to be caused by collision Non owned auto means I Any private passenger auto, station wagon type, pickup truck, van or trailer not owned by or furnishea or available for the reguhit use of you or any family member while in the custody of or being operated by you or any family member 2 Any auto or trailer you do not own while used as a tempomry su stitute for your covered auto which is out of normal use 15ecause of its a breakdown b repair c servicing d loss or c destruction We will also pa)' for direct and accidental loss caused by fire or lightning to clothes or other personal effects I which are owned by you or any family member and 2 which are in or on your covered auto Permanently installed means installed by bolts, bmckets, or welding in a location in accordance with applicable laws and regulations for the installation of such equipment or device TRANSPORTATION EXPENSES In addition, we wiII pay, without application of a deductible, up to $15 per day, to a maximum of $450, for 1 Transportation expenses incurred by you in the event of a total theft of your covered auto This applies only if the Declarations indicate that Oilier Than Collision is provided for that auto 2 Loss of use expenses for which you become legally responsible in the event of the total theft of a non owned auto This applies only if the Declarations indicate that Other Than Collision is provided for any your covered auto We will pay only expenses incurred during the period I Beginning 48 hours after the theft and 2 Ending when your covered auto or the nonowned auto is returned to use or we pay for its loss SALVAGE CHARGES In addition, we will pay general average and salvage charges that y ou or any family member are legally responsible for in transporting an auto EXCLUSIONS We will not pay for 1 Loss to your covered auto or any non owned auto whIch occUf$while they are being used as a public or livery conveyance This exclusion does not apply to ashare the expense car pool 2 Damage due and confined to a wear and tear b freezing c mechanical or electrical breakdown or failure or d road damage to tires This exclusion does not apply if the damage results from the total theft of your covered auto or any non owned auto 3 Loss due to or as a consequence of a radioactive contamination b war (declared or undeclared) c civil war d insurrection or e rebellion or revolution 4 Loss to a any electronic equipment or device that records, emits, amplifies, receives or tmnsmits audio, VIsual, or data signals including, but not limited to ( I) radios and stereos (2) tape decks (3) compact disc players or recorders (4) citizens band radios (5) telephones (6) two way mobile mdios (7) scanning monitor receivers (8) television monitor receivers (9) video cassette players or recorders (lO)audio cassette players or recorders ( II ) personal computers, or (12)digital video disc player or recorder 14 NCOOOI0605 9833P 8 Copyright, North Carolina Rate Bureau, 2005 b taF S records, discs, or other media used WIth any equipment or device described in a ' c any accessories used with equipment scribed in a Exclusions 4 a and ,4 c do not apply to a any equipt nent or device that is permanently in tailed by the vehicle's b the first $1,000 of any equipment or device that is permimcntly, In talled by other than the vehicle's manufacturer in any your covered auto or a non owned auto 5 Loss to a camper body or trailer you own which is not sllown, in the Declarations This exclusion (5 ) does not apply to a camper body ' or trailer you a acquire during the policy period and b ask us to insure within the policy period 'or within 30 days after you become the owner 6 Loss to any non owned auto while used by you or any family member in the business of a selling , b repairing , c sCrViCilJg , d , storing or e parking I vehicles designed for use mainly public highways This includes road testing and,de1iv ery 7 8 9 Loss to any ' on owned auto if used without the express or implied pennission of the owner or other person m lawful possession of such vehicle ' Wi th respect to any trailer shown in the DeclaratIons, foss to a awnings or cabanas or b equipment designed to create additional living facilities Loss to any your covered auto or any nonowned auto due to forfeiture ordered by the courts or destruction or ,confiscation ,by gov ernmentaJor civikauthorities because you or any family memb a engaged in illegal activities or b failed to comply with Environmental Protection Agency or Department ofTransportation standards NC 00010605 This exclusion does not apply to the interests of Loss Payees in your covered auto )O Loss to equipment designed or used to detect or ,deter radar, laser or other, speed monitoring equipment whether or not permanently Installed 11 Loss to any non owned auto being maintained or used by any person ,while, employed or otherwise engaged in any business not described in Exclusion This exclusion does not apply to the maintenance or use by you or any family memb er ora non owned auto which is,a vate passenger auto or tra,ler , , 12 Loss, any or jn or upon any your coverecf auto or a nonowned Iluto, including, but not limited to a special carpeting and insulation, furniture or bars b facilities for cooking and sleeping c height extending roofs or ladders d custom windows, murals, paintings or other decals or graphics e tool boxes and fifth wheel conversions f side exhausts and beaders and roli bars h , speci llwheeISltires or , , i 'body alterations ' Howey er, tltis (12 ) ,a does not apply to the first $1,000 or any such custom furnishings or equipment imo b 1 does not appl)' to a camper body shown in the Declarations, or a cap, cover or bedliner in or upon any pickup truck you own 13 Loss to, or loss of use of it auto rented by, i ' a you or b any family member if a rental vehicle company is precluded from rec overing such loss or loss of use, from you or that famOy member pursuant to the provisions of any applicable rental or law , LIMIT OF LIABILITY Our limit ofliability will be the lesser of the I Actual cash value of the stolen or damaged property or 15 9833P 8 Copyright, NorthCarolina 'I Bureau, 2005 1 ' 2 Amount necessary to repair or replace the property with olliefjn'opert)i oflike kind and quality This amount does not include any reduction in the value of the propertY after it has been repaired, as compared to its value before it was damaged Subject to the above our limit of liability for loss to I Personal effects is $100 and 2 A trailer not owned by you is $1,500 An adjustment for depreciation and physical condition will be made in determining actual cash value at the time of loss PAYMENT OF LOSS We may pay for the loss in money or repair or replace the damaged or stolen property We may, at our return any stolen property,to I You or 2 The address shown in this policy If we return stolen property we will pay for any damage resulting from the theft We may keep all or part of the property af an agreed or appraised value IN THE REPAIR OF YOUR COVERED AUTO UNDER THE PHYSICAL DAMAGE COVERAGE PROVISIONS OF THIS POLICY, WE MAY REQUIRE OR SPECIFY THE USE OF AUTOMOBILE PARTS NOT MADE BY THE ORIGINAL MANUFACTURER THESE PARTS ARE REQUIRED TO BE AT LEAST EQUAL IN TERMS OF FIT, QUALITY PERFORMANCE AND WARRANTY TO THE ORIGINAL MANUFACTURER PARTS THEY REPLACE NO BENEJi'IT TO BAILEE This insurance shall not directly or indirectly benefit any carrier or other bailee for hire OTHER INSURANCE If other insurance also covers the loss we will pay only our share of the loss Our share is the proportion that our limit of liability bears to the total of all applicable limits However, any insurance we provide with respect to a non owned auto shall be excess over any other collectible insurance NC o o oI 06 05 APPRAISAL If we and you do not agree on the amount of loss, either may demand an appraisal of the loss In this event, each party will select a competent appraiser The two ap rraisers will select an umpire The appraisers wll state separately the actual cash value and the amount of loss If they fail to agree they will submit their differences to the umpire A deCIsion to by any two will be bmding Each party Pay its chosen appraiser and Bear the expenses of the appraisal and umpire equally ' We do waive any of our rights under this policy by agree 109 to an appraIsal LOSS PAYEE If a Loss Payee is shown in the Declarations, then any Collision Coverage or Other Than Collision Coverage j rovided by this policy applies to the Loss Payee's interest in your covered auto IfCollision Coverage or Other Than Collision Coverage is cancelled Of nonreQewed, we will provide coverage for the Loss Payee's interest until 10 days aller t1ie date we mail or electronically transmit a notice of the cancellation or nonrenewar to the Loss Payee Any coverage for the Loss Payee's interest shull terminate on the earlier of the expiration of this 10 day period or the effective date of a policy or insurance binder for similar coverage for ' the Loss Payee's interest issued by another Insurance carrier Except for any continuation of coverage for the Loss Payee's mterest that may be provlCled under this paragraph in connection with tne Loss Paycc's right to notIce of cancellation or nonrenewal this coverage for the Loss Payee's interest is only provided for a loss that wourd otherwise be payabTe to you Notwithstanding any other provisions of this policy including but not limited to any continuation of coverage for the Loss Payee's interest as set forth above if Collision Coverage or Other Than Collision Coverage is rescinded, the Loss Payee's interest will, not be protected and the Loss Payee shall have no rights greater than your rights to recover for a loss If we pay you or the Loss Payee, then we are entitled to your and the Loss Payee's rights of recovery to the extent of our payment Our right of recovery does not impair the Loss Payee's right to recover the full amount of its claim from you I 2 16 9833P 8 Copyright, NorthCarolina Rate Bureau, 2 0 05 PART E l oDUTIES AFTER AN ACCIDENT OR LOSS FIl lNG A CLAIM GENERAL DUTIES, ' We must be notified promptly of how, when and where the accid,cnt o,r loss happened, Not, icc should also include the lames and addresses of any injured persons and of any A person seeking'coverage must I Coopemte with in the investis ation, settlement or defense of any claim or SUIt n , ,' I' 2 Promptly' send useopies of any legal in connection with the accident papers ' orloss 3 Submit as often as we, reasonably a to physical exams by physicians we select We will pay for these exams ' , b to examinations under oath and subscribe the same ' 4 Authorize us to obtain a medical reports and b other pertinent records 5 Submit a proof of loss wlien required by ADDITIONAL DUTIES FOR UNINSURED AND COMBINED UN,INSUREDI UNDERIJI (SUREDMOrORISTSGOVERAGE ' A person Uninsu red or Combined Uninsured Undennsured Motonsts Coverage must also Promptly notify ,if a hit and run driver is involved , 2 Promptly send us copies of the legal papers if suit is brou l tt A SUIt may not be brought by' an insured unul 60 daysaffer that person notIfies that defendant IS an , Any who intends to recovery against the owner or operator of an underinsured ,motor vehitle under this pohcy glye us I Notice of such intent and 2 fohe opportunity to at our expense, m ,prosecutlOn of such claIm ADDITIONAL DUTIES FOR COVERAGE ' ,fOR DAMAGE ,TO YOUR AUTO A person seeking'Covemge For Damage To Your Auto must also ' 1 Take reasonable steps after loss to protect covered auto or 'any' auto and their equipment fr()m further loss We will pay reasonable expenses incurred to do' this 2 Promptly notify' the 'police if your covered auto o'r any non owned auto is,stollm 3 Permit us to inspect and app'raise the damaged property before ts repair or oisposal , 1 PART F GENERAL PROVlSIONS BANKRUPTCY Bankruptcy or insolvency Of the insured shall not relieve us ofanY obligationS this policy CHANGES The each of your covered autos is based on ipformation we have you or You agree 1 Thanf any of thisinformation material to the development of the policy premium is incorrect, incomplete or clianged we may adjust the premium during the pohcy period 2 Tocoopenite vith us in determining if this informatIon is correct' and complete, and to advise us of any changes in this information Any adjustment of your premium will be made using the rules in effect'at the time'ofthe change may be made as the' result of a Premium change in ,' , , , t NC 00 010605 , t ' I ' , ' I tn use by t,he including cha 1ges , 2 Drivers , 3 Coverages or coverage limits 4 RatingteriitorY Eligibility,for discounts or credits ' We mayrevise your policy coverages to provide more without additional premium charge If we do this and you have the coverage which is changed, your policy will provide the additional coverage as of the date the revision is' effective in North Carolina Otherwise, this policy, contains all of the 'coverage agreements betwe eh you and us Its terms may not be changed or waived except by an endorsement issued , , 17 9833P 8 Copyright, North Carolina Rate Bureau, 2005 FRAUD OR MATERIALMISREP,RESENTATION , We do not provide cove tage for any I who has made, a fraudulent statement or engaged in fraudulent conduct io'connection with any accident, or loss for whichcoverase is sought under this policy o r 2 if a named insuredmade a material senlation in the application for this policy of insurance This provision applies to Part A , Liability Coverage to the extent that the Hmits ofliability exceed tne minimum limits reguired by the Financial Responsibility Law of North Carolina If we make payment under Part A UabilityCoveragewhich we would not have ,otherwise made in the absence of the preceding sentence, then we shall have the right to recover such payment from any, insur d who made a 'fraudulent 'statement, engaged m fraudulent conduct, or made a material misrepresentation AGAINST US No, legal action may be brought against us until there lias been full compliance with all the terms of this policy In under Part A, no lega,I ac tion may be brought against us until ' I We agree in writing that the insured has an obligation to pay or 2 The amount of thatobligation has been finally determined by judgment after trial No person or organization has any right under this policy to bring us into any action to aetermine the , liabihty of an insured OUR RIGHT TO RECOVER PAYMENT A (fwe make a payment under this policy and the person to or for whom payment was' made has a right to recover' damages from another, we shall be subrogated to that right That person shall do 1 Whatever is necessary to enable us to exercise our rights and 2 Nothing after loss t9 prejudice them However, our rights under this' paragraph do not apply to 1 Part 8 2 Parts C 1 and C2, as, those parts contain separate provisions whichsra,te our right to recover payment under those 3 Part D, against any person using your covered auto with a reasonable belief that that person is entitled to do so NC 00 010605 B If we mak

Question

READ FIRST  For the following questions, assume that you have the State Farm Car Policy handed out in class, including the coverage and limits shown on the Declarations page  Also assume that the 2002 Mazda is the only car you own, unless the question indicates that you purchase another vehicle, and that any situations involving borrowing cars is done with permission, unless otherwise stated, and that you are willing to pay any additional premiums due for vehicle changes  For each situation, calculate how much your insurance policy would pay, in total  Unless otherwise indicated, assume the loss occurs during the policy period  Do not assume facts not given in the question  DECLARATIONS PAGE State Farm Mutual Automobile Insurance Company 2702 Ireland Grove Rd Bloomington, IL 61709 Policy Number S020591 17F Policy Period August 13, 2006   February 4, 2007 Named Insured FIL 250 Student 194 Main Street Normal, IL 61790 YEAR 2002 SYMBOLS MAKE Mazda MODEL V6 BODY STYLE 4DR VEHICLE ID    1YVHP84D065M71234 COVERAGES CLASS 1A0011AF PREMIUMS A Bodily Injury Property Damage Liability Limits of Liability   Coverage A   Bodily Injury Each Person Each Accident $100,000 $300,000 Limits of Liability   Coverage A   Property Damage Each Accident $100,000 C Medical Payments Limit of Liability   Coverage C Each Person $25,000 10 08 D Comprehensive 74 84 G 100 $100 Deductible Collision 198 39 H Emergency Road Service 5 01 U Uninsured Motor Vehicle Limits of Liability   U Each Person Each Accident $100,000 $300,000 7 00 W Underinsured Motor Vehicle Limits of Liability   W Each Person Each Accident $100,000 $300,000 7 40 Total Premium for This Policy Period 143 36 $446 08 IMPORTANT MESSAGES Your policy consists of this declarations page, the policy booklet   form 9913A, and any endorsements that apply, including those issued to you with any subsequent renewal notice  After pumping gas, you forget to remove the hose from your gas tank  As you drive off the hose breaks, spilling some gasoline and starting a fire  The fire causes $325,000 in damage to the gas station  You are held responsible for the entire loss  Your policy will pay  A  0 B  $100,000 C  $300,000 D  $325,000 E  None of the above  You start backing out of your garage before the garage door is fully up  The top of your car hits the garage door, breaking the door and damaging your car  It costs $1100 to repair your car and $1600 to repair the garage door  Your policy will pay  A  0 B  $1,100 C  $1,600 D  $2,600 E  $1,000 Late one night, you are driving home when you run into another car injuring the driver of the other car and damaging both cars  The accident is your fault  The other driver wins a bodily injury award of $20,000  It costs $2600 to repair your car and $4000 to repair the other car  Your policy will pay  A  0 B  $24,000 C  $26,500 D  $28,000 E  None of the above  You park your car on Sixth Street and walk over to the quad for lunch  While crossing Wright Street, you are hit by a bicyclist and knocked to the ground  You hit your head so hard you are knocked out  When you wake up, the person who hit you is gone  You incur $45,000 in medical bills  The person who hit you would be liable for $150,000 in damages if you could find them  Your policy will pay  A  0 B  $25,000 C  $45,000 D  $125,000 E  None of the above  You are driving your car when you run into 2007 Rolls Royce, seriously injuring the driver and a passenger  Each of them sues you and wins a bodily injury award of $250,000  You are also liable for the damage you caused to the Rolls Royce, which costs $175,000 to repair  Your policy will pay  A  0 B  $300,000 C  $400,000 D  $475,000 E  None of the above  Your car develops a loud engine knock  When you bring it to the repair shop, they tell you the engine valves need to be replaced and you have to leave your car there for three days for repairs  You rent a car for $30 a day  It costs $700 for the repair work  Your policy will pay  A  0 B  $75 C  $600 D  $775 E  None of the above  You are visiting New Orleans when another hurricane hits, causing Lake Pontchartrain to overflow the levies and flood the city again  Your car, which contains your laptop, is damaged in the flooding  It costs $7500 to repair your car  Your laptop, valued at $900, is damaged beyond repair  Your policy will pay  A  0 B  $7,500 C  $8,400 D  $8,300 E  None of the above  You are walking in the financial district of New York City on your way to an interview with Deloitte   Touche  As you cross the street, you are hit by an uninsured driver  You incur a medical bill of $300,000  You would be entitled to a bodily injury award of $600,000 if the cab driver had been insured  Your policy will pay  A  0 B  $100,000 C  $125,000 D  $600,000 E  None of the above  While driving your car, you are hit by another car  Your car is damaged and you are seriously injured  You incur $15,000 in medical bills  You would be entitled to collect a bodily injury award of $45,000, but the driver only has 20 40 15 liability limits  Your policy will pay  A  0 B  $15,000 C  $25,000 D  $50,000 E  None of the above  You are driving your car when you run into the back of a bus, causing it to leave the road and land in a ditch  Ten people on the bus are injured, and each wins a bodily injury award against you for $25,000  It costs $140,000 to repair the bus and $8,100 to repair your car  Your policy will pay  A  $133,000 B  $358,000 C  $398,000 D  $408,000 E  None of the above  Please read Ihe policy carefully  If Ihere is an accident, contact your State Farm agent or one of our Claim Offices al once  (See  INSURED'S DUTIES  in Ihis policy booklet ) SPECIMEN State Farm Personal Auto Policy Booklet North Carolina Policy Form 9833P 8 AGREEMENT In return for payment of the premium and subject to all the terms of this policy, we agree with you as follows  DEFINITIONS Throughout this policy,  you  and  your  refer to  I  The  named insured  shown in the Declarations  and 2  The spouse if a resident of the same household   We ,  us  and  our  refer to the Company providing this insurance  For the purposes of this polic Y a private passenger type auto, pickup or van sha iI tie deemed to be owned by a person if leased  I  Under a written agreement to that person  and 2  For a continuous period of at least 6 months  Other words and Ilhrases are defined  They are boldfaced when useC    Bodily injury  means bodily harm, sickness or disease, includmg death that results   Business  means trade, profession or occupation   Family member  means a person related to you by blood, marriage or adoption who is a resident of your household  This includes a ward or foster child   Occupying  means in  upon  getting in, on, out or ofT   Property damage  means physical injury to, destruction of, or loss of use of tangible property   Trailer  means a vehicle designed to be pulled by a  I  Private passenger auto or station wagon type  or 2  Pickup truck or van  lt also means a farm wagon or farm implement while pulled by a vehicle listed in 1  or 2  abOve   Your covered auto  means  I  Any vehicle shown in the Declarations  2  A newly acquired auto  3  Any trailer you own  4  Any auto or trailer not owned by you while used as a temporary substitute for any other vehicle described in this definition which is out of normal use because of its  a  breakdown  NC 00010605 b  repair  c  servicing  d  loss  or e  destruction  This provision (4 ) does not apply to Part D   Coverage For Damage To Your Auto  ''Newly acquired auto  means any of the following types of vehicles you become the owner of during the policy period  I  a private passenger auto or station wagon type  or 2  a pickup truck or van that  a  has a Gross Vehicle Weight as specified by the manufacturer of less than 10,000 pounds  and b  is not used for the delivery or transportation of goods and materials unless such use is  (I) incidental to your business or installing, maintainmg or repairing furnishings or equipment  or (2) for farming or ranching  Any coverage for a newly acquired auto is subject to the following  I  If a newly acquired auto replaces a vehicle shown in the Declarations, It will have the same coverage as the vehicle it replaced except that coverage, if any, under Part D   Coverage For Damage To Your Auto applies only if you ask us to insure it within 30 days after you become the owner  2  If a newly acquired auto is in addition to any shown in the Declarations, it will have the broadest coverage we now provide for any vehicle shown in the DeclaratIons if you ask us to insure it within 30 days after you become the owner  3  Coverage under this policy terminates lor any newly acquired auto on the effective date anit time of a policy (other than this policy') issued by us or any other company that deSCribes such vehicle on Its declarations page  2 9833P 8 Copyright, North Carolina Rate Bureau, 2005 4  specitied time period described above has elapsed, any coverage we provide for the newly acquired auto will begin at the time you request the coverage  You must pay us any added amount due for any coverage we provide for a newly acquired auto    If you ask us to insure a newly acquired auto within the applicable specified time period described in I  or 2  above  any coverage we provide for the newly acquired auto begins on the date you become the O     ner  If you ask us to insure a newly acquired auto after the applicable PART A   LIABILITY COVERAGE INSURING AGREEMENT We will pay damages for bodily injury or property damage for whicn any insured becomes legally responsible because of an auto accident  Damages include prejud ment interest awarded against the insured  We will settle or defend, as we consider appropriate  any claim or suit asking for these damages  1n addition to our limit of liability, we will pay all defense costs we incur  Our dut)' to settle or etween an insured and the owner or' operator of the underinsured motor vehicle  and  ' , 2  Consent to adyancepayment to the insured in equal to the tentative settlement  Any jt,ldgment'for damages arisitlg out of a suit  is not bmdmg, on us unless we have been served, WIth a copy,of the sUnUnons, comp'laint or other 'process against the uninsured or motorist  Insured as ,used in this Part means  1  You or any family member  2  Any other person occupying  ' a  your, covered auto  or b  any other auto operated by you  3  Any person for dilmages that person is entitled to recover 'because of bOdilyiniuryto which this coverage applies sus tamed  by a person listed in I  or 2  above  Property daJ llage as used in this Part means injury to or destructIon of  I  Your covered auto  2  AnYl'roperty owned by a person listed in I  or 2 ofmsured  lO NCOOOI0605 9833P 8 Copyright  North Carolina Rate Bureau, 2005 b  a vehicle which you or any family mem' '   ber are occupying  or c  your covered auto  4  To which a liability bond or policy applies at the time of the accident, but the bonding or insuring company  a  denies coverage  or b  is or becomes insolvent  However, uninsured motor vehicle does not include any vehicle or equipment  1  Owned by you  2  Owned or operated by a self insurer under any applicable motor vehicle law  except a selfinsurer which is or becomes insolvent  3  Owned by  a  The,United States of America  b  Canada  c  a state  or d  an agency, other than a political subdivi   sion of a , b  or c  above  4  Operated on rails or crawler treads  5  Which is a farm type tractor or equipment designed mainly for use ofT public roads while not on public roads  6  located lor use as a residence or premIses  EXCLUSIONS A  We do not provide coverage for property damage or bodily injury caused by an uninsured motor vehicle and sustained by any insured  I  If that Insured or the legal representative settles the bodily injury or 'property damage claim WIthout our written consent  2  While occupying your covered auto while it is used as a public or livery conveyance  This exclusion does not apply to a sllare the expensecar pool  3  Using a vehicle without a reasonable belief that that Insured is entitled to do so  This Exclusion A 3  does not apply to a family member using your covered auto whicll is owned by you  ' ' 4  For the first $ OO of the amount of I roperty damage to the property of each insured as the result of any one accident  NC 00 010605 5  If the property is contained in or struck by a motor vehicle (other than)'our 'covered auto) owned by you or any family member  ' 6  For any punitive or exemplary damages, or legal costs related thereto  , 7  While occupying, or when struck by, any motor vehicle owned by you or any family member which is not Insured for this 'coverage under this policy  This includes a of any type used with that vehicle  , However, this exclusion does not apply to you or any family member  B  We do not provide coverage for property damage caused by a hit and run vehicle whose operator or owner cannot be identified  C  ' We do not provide coverage for bodily InJul')' caused by an underlnsured motor vehicle aniJ sustained by,any insured  I  Irthat insured or the legal representative settles the bodily injury claim without our consent  However  tllis exclusion does not apply if we  a  have been given written notice in advance of a settlcment between an insured and the owner or ollerator of the underlnsured,motor vetilcle  and b , we fail ,to advance payment to the insured iii an amount cq,ual to the tentative settlement within thirty days receipt of such written notice  2  While occupying your covered  auto while it is bemg used as a public or livery conveyance  ThiS exclusion does not apply to a car pool  3  Using a vehicle without reasonable belief that that Insured is entitled to do so  This Exclusion C 3  does not apply to a family member using your covered auto which is owned by you  4  For any punitive or exemplary damages, or legal costs related thereto  5  While occ upylng, or when struck by, any motor vehicle owned by you or any family member which is not Insured for this coverage under this policy  This includes a trailer of any type used with that vehicle  However, this exclusion does not apply to you or any famDy member  , 11 9833P 8 Copyright  North Carolina Rate Bureau,2005 D  This coverage shalJ   not apply dir ectly or indi  reedy to  benefit any  insurer or, underany of the fol  owingor any similar law  I  workers' compensation law  or 2  disability benefits law    LIMIT OF LIABILITY The limit, of bodily injury liability shown in the Declanitions ' for each person for Combined UninsuredlUnderinsured Motorists Coverage is our maximum limit of liability for all damages for bodily injury, including damages for care, loss of services or death, sustained by anyone person in any one accident  Subject to' this limit for each person, the limit of bodily injury liability shown in the Declarations for each accident for Combined suredlUnderinsured MotoristsCoveiage is our maximum limit of liability for all damages for bodily injury resulting from anyone accident  The limit of property damage liability shown in the Declarations for each accident for Combined UninsuredlUnderinsured Motorists Coverage is our maximum limit of liability for all damages for property damage caused by an uninsured motor vehicle and resulting from anyone accident  This is m'ost we will pay bodily Injury and property rega,rdlesSof the number of  I  Insureds  '   '     ' ,' 2  3  , Claims made  Vehicles or premiums shown' in tbe Declaraor ' 4  Vehicles involved in the accident  The limits of bodily injury liabiJityshown in the Declarations for each  person and each accident for this coverage shall be reduced by all sums  I, Paid because of the bodily injury   by or on behalf of persons or organizations wllo may be legally responsible  This includes all sums paid under Part A  2  Paid or payable because of the bodily injury under any workers' compensation law  How ever  this reduction ,does not apply to the extent that an employer's lien  is required to be paid under North Carolina's workers' compensation law  and 3  Paid or payable because of the bodily injury under any disability benefits law oraily similar law  NC 00010605 The most we will pay for bodily Injury damages to an insured under this coverage IS tl1e lesser of  a  the limit of bodily injury liability shown in the Declarations fOf each person for this coverage by all sums' described in r  items I   2  and 3  of the preceding paragraph  or   b  the damages sustained by the insured for bodily Injury reduced by all sums described in items I , 2  and 3  in the preceding paragraph  The limit of property damage liability under this coverage shall be reduced by all sums paid because of the property damage by or on behalf of persons or organizations who may be legally responsible  This mcludes all sums payable under Part A  No payment will be made for loss paid or payable to insured under Part D or any policy of property IDsurance  A lr payment to any person under wll reduce any amount that person IS entItled to recover for the same damages under Part A  This coverage is excess over and shall not duplicate any amount paid or payable under Part B  OUR RIGHT TO RECOVER PAYMENT A  If we make a payment under this coverage and the person to or Ii lf whom payment was made has a right to recover damages from another  we shall be subrogated 10 lliat right  Further, the execution of a covenant not to enforce judgment by the injured purty shall not preclude us from pursumg our right to sue for or otherwise   recover any paymenl made   under this coverage from anyone else who may be liable  The perso n to or lor whom payment was   made 1 hall do  J    Whatever is necessary to enable LIS to exercise our rights  and '   2  Nothing after loss to prejUdice them  However, our   rights   under ' this ' paragraph do not apply agalOst the owner or operator of an undennsured motor vehicle if we have been given written notice in advance of a settlement and fail to advance payment in an amount equal to the tentative settlement within 30 days following receipt of such notice   B  If we make a pay ment under this coverage and the person to orfor whom payment is made rccovers damages from anotl1er, thai person shall  1    Hold intrust for us the proceeds of the recovery  and '   2  Reimburse us to the extent of our payment  12 9833P 8 Copyright, North Carolina Rate Bureau,  2005 OTHER INSURANCE If this policy and any other'auto insurance policy apply to the same accident, the maximum amount payable under all applicable policies for all injuries to an insured caused by an uninsured motor vehicle or underinsured motor vehiCle shall be the sum of the highest limit of liability for this coverage under each policy  '    n addition, if there is other applicable similar'insurance, we will pay only our share of the loss  Our share is  the proportion that our limit  of liability bearS to the toial Of' all' applicable limits  However, anyinsurimce we provide with respect to a vehicle oyer, any other colyou do not own sllttU be lectible insurance    ARBITRATION If we and an insured do not agree  I  Whether that insured is legally entitled to recover  compensatory damages from the owner or driver of an uninsured motor vehicle or underinsured motor vehicle  or 2  As to amount of such damages  the insured, may demand to settle the dispute by arbitration  The following procedure will be used  1  Each party will select a competent arbitrator  The two so se lected will select a third  If the third arbitrator is not selected within 30 days, the insured or we may request ajudge of a court of record to name one  The court must be in the county and state in which arbitration is pending  3  'Each party will pay its chosen arbitrator  Each will pay half of all other expenses of tion  Fees to lawyers a t ld  witnesses lU'e not considered arbitration expenses and are to be paid by the party hiring these persons  4  tinles$  the in suredand we agree otherwise, arbitration will take place in the county and   state  in which the insured lives  Arbitration ,  will be subject to the usual rules of procedure and evidence in such county and state  The arbitrators will resolve the issues  A written decision on' which two arbitrators agree will be binding on the insured and us  5  Any arbitration action against the company must begin within the time limit allowed for bodily injury or death actions in the state where the accident occurred    2  6  7  Judgment upon award may be entered in any proper court  ' As an, alternative, the insured and we may agree to arbitrate by rules other than slated above  PART D   COVERAGE FOR DAMAGE TO YOUR AUTO l  fire or lightning  2 , smoke due to a sudden, unusual and faulty operation of any fixed heating equipment serving the premises to which the auto  IS stored  3  the stra  nding, S inking, COli  iSlon t or derailment oT any conveyance m or  on wnich   , the auto is being transported   Collision  means the upset of your covered auto or a non owned auto or  their impact with another vehicle or   , 'Loss caused by' the following is considered other , than collision  l  Missiles or falling objects  2    Fire  3  Theft or larceny  4 ' Explosion or earthquake  5  Windstorm  ,  6  Hail, water or flood  7  Malicious mischief or vandalism  INSURING AGREEMENT We will pay for direct and accidental loss to your covered auto o,r any non owned auto, including their equipment  Direct and accidental loss does not include any reduction  in the  value of any vehicle after it has been repllired, as compared to its value before it was damaged  We will pay for loss to your covered auto caused by  I  Other than collision only  if the Declarations indicate that Other Than Collision Coverage is provided for that auto  2  Collision only if the Declarations indicate that Collision Coverage iii provided for that auto  If there is a loss tO,8 non owned auto, we will provide the  broadest coverage applicable to any your covered auto shown in the Declarlltions  Our will be reduced by any deductible shown m the Declarations  The deductible will not apply to a loss caused by  NCOO 0) 0605 13 9833P 8 Copyright, North Carolina Rate Bureau, 2005 8  Ri, t or civil commotion     9  Contact with hiTd'otlirtitrial or 10  Breakage of glasS  If loss is caused by contact with a bird or animal, or if breakage of glass is caused by collision, you may elect to Ilave eIther loss considered to be caused by collision     Non owned auto  means  I  Any private passenger auto, station wagon type, pickup truck, van or trailer not owned by  or furnishea or available for the reguhit use of you or any family member while in the custody of or being operated by you or any family member  2  Any auto or trailer you do not own while used as a tempomry su stitute for your covered auto which is out of normal use 15ecause of its  a  breakdown  b  repair  c  servicing  d  loss  or c  destruction  We will also pa)' for direct and accidental loss caused by fire or lightning to clothes or other personal effects  I  which are owned by you or any family member  and    2  which are in or on your covered auto   Permanently installed  means installed by bolts, bmckets, or welding in a location in accordance with applicable laws and regulations for the installation of such equipment or device  TRANSPORTATION EXPENSES In addition, we wiII pay, without application of a deductible, up to $15 per day, to a maximum of $450, for  1  Transportation expenses incurred by you in the event of a total theft of your covered auto  This applies only if the Declarations indicate that Oilier Than Collision is provided for that auto  2  Loss of use expenses for which you become legally responsible in the event of the total theft of a non owned auto  This applies only if the Declarations indicate that Other Than Collision is provided for any your covered auto  We will pay only expenses incurred during the period  I   Beginning 48 hours after the theft  and 2  Ending when your covered auto or the nonowned auto is returned to use or we pay for its loss  SALVAGE CHARGES In addition, we will pay general average and salvage charges that y ou or any family member are legally responsible for in transporting an auto  EXCLUSIONS We will not pay for  1  Loss to your covered auto or any non owned auto whIch occUf$while they are being used as a public or livery conveyance  This exclusion does not apply to ashare the expense car pool  2  Damage due and confined to  a  wear and tear  b  freezing  c  mechanical or electrical breakdown or failure  or d  road damage to tires  This exclusion does not apply if the damage results from the total theft of your covered auto or any non owned auto  3  Loss due to or as a consequence of  a  radioactive contamination  b  war (declared or undeclared)  c  civil war  d  insurrection  or e  rebellion or revolution  4  Loss to  a  any electronic equipment or device that records, emits, amplifies, receives or tmnsmits audio, VIsual, or data signals  including, but not limited to  ( I) radios and stereos  (2) tape decks  (3) compact disc players or recorders  (4) citizens band radios  (5) telephones  (6) two way mobile mdios  (7) scanning monitor receivers  (8) television monitor receivers  (9) video cassette players or recorders  (lO)audio cassette players or recorders  ( II ) personal computers, or (12)digital video disc player or recorder  14 NCOOOI0605 9833P 8 Copyright, North Carolina Rate Bureau, 2005 b  taF S  records, discs, or other media used WIth any equipment or device described in a  '  c  any accessories used with equipment   scribed in a  Exclusions 4 a  and ,4 c  do not apply to  a any equipt nent or device that is permanently in  tailed by the vehicle's b  the first $1,000 of any equipment or device that is permimcntly, In talled  by other than  the vehicle's manufacturer       in any your covered auto or a non owned auto 5  Loss to a camper body or trailer you own which is not sllown, in the Declarations  This exclusion (5 ) does not apply to a camper body '  or trailer you  a  acquire during the policy period  and b  ask us to insure within the policy period 'or within 30 days after you become the owner  6  Loss to any non owned auto while used by you or any family member in the business of  a  selling  , b  repairing   ,  c  sCrViCilJg , d  , storing  or e  parking  I    vehicles designed for  use mainly public highways  This includes road testing  and,de1iv  ery  7  8  9  Loss to any '   on owned auto if used without the express or implied pennission of the owner or other person m lawful possession of such vehicle  ' Wi th respect to any trailer shown in the DeclaratIons, foss to  a  awnings or cabanas  or   b  equipment designed to create additional living facilities  Loss to any your covered auto or any nonowned auto due to forfeiture ordered by the courts or  destruction or ,confiscation ,by gov   ernmentaJor  civikauthorities because you or any family memb      a  engaged in illegal activities  or b  failed to comply with Environmental Protection Agency or Department ofTransportation standards  NC 00010605 This exclusion does not apply to the interests of Loss Payees in your covered auto  )O  Loss to equipment designed or used to detect or ,deter radar, laser or other, speed monitoring equipment whether or not  permanently Installed  11  Loss to any non owned auto being maintained or  used by any person ,while, employed or otherwise engaged in any business not described in Exclusion This exclusion does not apply to the maintenance or use by you or any family memb er ora non owned auto which  is,a vate passenger auto or tra,ler  , , 12  Loss, any or jn or upon any your coverecf auto or  a nonowned Iluto, including, but not limited to    a  special carpeting and insulation, furniture or bars  b  facilities for cooking and sleeping  c  height extending roofs or ladders  d  custom windows, murals, paintings or other decals or graphics  e  tool boxes and fifth wheel conversions  f    side exhausts and beaders     and roli bars      h  , speci llwheeISltires  or ,  , i  'body alterations  ' Howey er, tltis (12 )    ,a  does not apply to   the first $1,000 or any such custom furnishings or equipment  imo b 1 does not  appl)' to a camper body shown in   the   Declarations, or a cap, cover or bedliner in or upon any pickup truck you own  13  Loss to, or loss of use of  it auto rented by,   i ' a  you  or b  any family member  if a rental vehicle company is precluded from rec overing such loss or loss of use, from you  or   that  famOy  member pursuant to the provisions of any applicable rental   or law , LIMIT OF LIABILITY Our limit ofliability will be the lesser of the  I  Actual cash value of the stolen or damaged property  or 15 9833P 8 Copyright, NorthCarolina 'I Bureau, 2005   1 ' 2  Amount necessary to repair or replace the property  with olliefjn'opert)i  oflike kind and quality      This amount does not include any reduction in the value of the propertY after it has been repaired, as compared to its value before it was damaged    Subject to the above  our limit of liability for loss to    I  Personal effects is $100  and 2  A trailer not owned by you is $1,500  An adjustment for depreciation and physical condition will be made in determining actual cash value at the time of loss    PAYMENT OF LOSS We may pay for the loss in money or repair or replace the damaged or  stolen property  We may, at our return any stolen property,to    I  You  or 2  The address shown in this  policy   If we return stolen property we will pay for any damage resulting from the theft  We may keep all or part of the property af an agreed or appraised value  IN THE REPAIR OF YOUR COVERED AUTO UNDER THE PHYSICAL DAMAGE COVERAGE PROVISIONS OF THIS  POLICY, WE MAY REQUIRE OR SPECIFY THE USE OF AUTOMOBILE PARTS NOT MADE BY THE ORIGINAL MANUFACTURER  THESE PARTS ARE REQUIRED TO BE AT LEAST EQUAL IN TERMS OF FIT, QUALITY  PERFORMANCE AND WARRANTY TO THE ORIGINAL MANUFACTURER PARTS THEY REPLACE  NO BENEJi'IT TO BAILEE This insurance shall not directly or indirectly benefit any carrier or other bailee for hire  OTHER INSURANCE If other insurance also covers the loss we will pay only our share of the loss  Our share is the proportion that our limit of liability bears to the total of all applicable limits  However, any insurance we provide with respect to a non owned auto shall be excess over any other collectible insurance  NC o o oI  06 05 APPRAISAL If we and you do not agree on the amount of loss, either may demand an appraisal of the loss  In this event,  each party will select a competent appraiser  The two ap rraisers will select an umpire  The appraisers wll state separately the actual cash value and the amount of loss  If they fail to agree  they will submit their differences to the umpire  A deCIsion to by any two will be bmding  Each party     Pay its chosen appraiser  and Bear the expenses of the appraisal and umpire   equally  '   We do waive any of our rights under this policy by agree 109 to an appraIsal  LOSS PAYEE If a Loss Payee is shown in the Declarations, then any Collision Coverage or Other Than Collision Coverage j rovided by this policy applies to the Loss Payee's interest in your covered auto  IfCollision Coverage or Other Than Collision Coverage is cancelled Of nonreQewed, we will provide coverage for  the Loss Payee's interest until 10 days aller t1ie date we mail or electronically transmit a notice of the cancellation or nonrenewar to the Loss Payee  Any coverage for the Loss Payee's interest shull terminate on the earlier of the expiration of this 10 day period or the effective date of a policy or insurance binder for similar coverage for ' the Loss Payee's interest issued by another Insurance carrier  Except for any continuation of coverage for the Loss Payee's mterest that may be provlCled under this paragraph in connection with tne Loss Paycc's right to notIce of cancellation or nonrenewal  this coverage for the Loss Payee's  interest is only provided for a loss that wourd otherwise be payabTe to you  Notwithstanding any other provisions of this policy  including but not limited to any continuation of coverage for the Loss Payee's interest as set forth above  if Collision Coverage or Other Than Collision Coverage is rescinded, the Loss Payee's interest will, not be protected and the Loss Payee shall have no rights greater than your rights to recover for a loss  If we pay you or the Loss Payee, then we are entitled to your and the Loss Payee's rights of recovery to the extent of our payment  Our right of recovery does not impair the Loss Payee's right to recover the full amount of its claim from you  I  2  16 9833P 8 Copyright, NorthCarolina Rate Bureau, 2 0 05 PART E  l  oDUTIES AFTER AN ACCIDENT OR LOSS   FIl lNG A CLAIM GENERAL DUTIES, '  We must be notified promptly of how, when and where the accid,cnt o,r loss happened,  Not, icc should also include  the  lames and addresses of any injured persons and of any A person seeking'coverage must  I  Coopemte with in the  investis ation,   settlement  or defense of any claim or SUIt  n    ,   ,'  I'       2  Promptly' send useopies of any legal  in  connection  with the accident papers '  orloss  3  Submit as often as we, reasonably a  to physical exams by physicians we select  We will pay for these exams ' , b  to examinations under oath and subscribe the same  ' 4  Authorize us to obtain    a  medical reports  and b  other  pertinent records  5  Submit a proof of loss wlien required by   ADDITIONAL DUTIES FOR UNINSURED AND COMBINED UN,INSUREDI UNDERIJI (SUREDMOrORISTSGOVERAGE '   A person Uninsu red or Combined Uninsured Undennsured Motonsts Coverage must also  Promptly notify ,if a hit and run driver is involved  , 2  Promptly send us copies of the legal papers if suit is brou l tt  A SUIt may not be brought by' an insured unul 60 daysaffer that person notIfies that defendant IS an , Any who intends to recovery against the owner or operator of an underinsured ,motor vehitle under this pohcy  glye us       I  Notice of such intent  and 2   fohe opportunity to at our expense, m ,prosecutlOn of such claIm  ADDITIONAL   DUTIES  FOR COVERAGE ' ,fOR DAMAGE ,TO YOUR AUTO A person seeking'Covemge For  Damage To Your Auto must also  ' 1  Take reasonable steps after loss to protect covered auto or 'any' auto and their equipment fr()m further loss  We will pay reasonable expenses incurred to do' this  2   Promptly notify' the 'police if your covered auto o'r any non owned auto is,stollm  3  Permit us to inspect and app'raise the damaged   property before   ts repair or oisposal , 1  PART F   GENERAL PROVlSIONS BANKRUPTCY Bankruptcy or insolvency Of  the insured shall not relieve us ofanY obligationS this policy   CHANGES The each of your covered autos is based on ipformation we have you or You agree  1  Thanf any of thisinformation material to the development of the policy premium is incorrect, incomplete or clianged  we may adjust the premium during the  pohcy period  2  Tocoopenite  vith us in determining if this informatIon is correct' and complete, and to advise us of any changes in this  information  Any adjustment of your premium will be made using the rules in effect'at the time'ofthe change  may be made as the' result of a Premium change in   ,'    ,     ,   , t NC 00 010605 ,  t  ' I '  ,  '   I    tn use  by t,he     including cha 1ges    ,    2  Drivers ,     3  Coverages or coverage limits  4  RatingteriitorY    Eligibility,for discounts or credits  '     We mayrevise your policy coverages to provide more without additional premium charge  If we do this and you have the coverage which is changed, your policy will provide the additional coverage as of the date the revision is' effective in North Carolina  Otherwise, this policy, contains all of the 'coverage agreements betwe eh you and us  Its terms may not be changed or waived except by an endorsement issued    ,  ,  17 9833P 8 Copyright, North Carolina Rate Bureau, 2005 FRAUD OR MATERIALMISREP,RESENTATION ,    We do not provide cove tage for any I  who has made, a fraudulent statement or engaged in fraudulent conduct io'connection with any accident, or loss  for whichcoverase is   sought under this policy  o r   2  if a named insuredmade a material senlation in the application for this policy of insurance  This provision applies to Part A  , Liability Coverage to the extent that the Hmits ofliability exceed tne minimum limits reguired by the Financial Responsibility Law of North Carolina  If we make payment under Part A   UabilityCoveragewhich we would not have ,otherwise made in the absence of the preceding sentence, then  we shall have the right to recover such payment from any, insur  d who made a 'fraudulent 'statement, engaged m fraudulent conduct, or made a material misrepresentation  AGAINST US No, legal action may be brought against us until there lias been full compliance with all the terms of this policy  In under  Part A, no lega,I ac  tion may be brought against us until ' I  We agree in writing that the insured has an obligation to pay  or 2  The amount of thatobligation has been finally determined by judgment after trial  No person or organization has any right under  this policy to bring us  into any action to aetermine the ,  liabihty of an insured  OUR RIGHT TO RECOVER PAYMENT A  (fwe make a payment under this policy and the person to or for whom payment was' made has a right to recover' damages from another, we shall be subrogated to that right  That person shall do  1  Whatever is necessary to enable us to exercise our rights  and 2  Nothing after loss t9 prejudice them  However, our rights under this' paragraph do not apply to  1  Part 8  2  Parts C 1 and C2, as, those parts contain separate provisions whichsra,te our right to recover payment under those  3  Part D, against any person using your covered auto with a reasonable belief that that person is entitled to do so  NC 00 010605 B  If we mak

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READ FIRST: For the following questions, assume that you have the State Farm Car Policy handed out in class, including the coverage and limits shown

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