Question

1. in an attempt to reduce her expenses, mattie sells her car. what must she do to cancel her auto insurance policy?

○ a. forfeit the unearned premium
○ b. nothing, because coverage automatically ended when she sold the car
○ c. notify the insurer in writing of her intent to cancel the policy
○ d. pay a cancellation fee

1. underinsured motorists (uim) coverage protects an insured in an accident caused by a motorist who:

○ a. has coverage limits that are lower than the insureds um/uim limits
○ b. has no auto liability insurance
○ c. is driving a rental car
○ d. is not legally responsible for causing the accident

Explanation:

1. Question 1:

• Auto insurance policies do not automatically cancel when a car is sold. The policyholder (Mattie) has an obligation to notify the insurer. If she doesn't notify, the policy may still be in effect (and she may still be charged premiums). Also, she is entitled to a refund of unearned premiums (so option a is wrong), and there is no general cancellation fee for simply notifying the insurer of cancellation (option d is wrong).

1. Question 2:

• Underinsured motorist (UIM) coverage is for when the at - fault driver has insurance, but their coverage limits are lower than the insured's UM/UIM limits. Option b is for uninsured motorist (UM) coverage. Option c (driving a rental car) is not relevant to UIM coverage criteria. Option d (not legally responsible) would mean the other driver is not at - fault, so UIM coverage (which is for when the other driver is at - fault but underinsured) would not apply.

Answer:

1. c. notify the insurer in writing of her intent to cancel the policy
2. a. has coverage limits that are lower than the insured's UM/UIM limits