Other Than Life (OTL) Practice Exam

What type of insurance coverage is an Owner's policy of insurance on a specific automobile?

1. Excess coverage

2. Primary coverage

3. Secondary coverage

4. Optional coverage

The correct answer is: Primary coverage

An Owner's policy of insurance on a specific automobile is classified as primary coverage because it is the main insurance policy that provides protection for the vehicle and its owner in the event of loss, damage, or liability arising from the operation of that automobile. Primary coverage is designed to be used first when a claim occurs, meaning it pays out before any other potential policies that might overlap in coverage. This type of policy typically includes coverage for liability, collision, and comprehensive incidents directly relating to the insured automobile. It is essential for vehicle owners as it lays the foundational financial protection necessary to cover damages and liabilities resulting from accidents or other covered events. While excess, secondary, and optional coverage can play roles in an insurance framework, they do not serve as the main policy covering an automobile. Excess coverage refers to additional insurance that pays out after primary limits have been reached. Secondary coverage would apply under certain conditions when a primary policy is not available. Optional coverage represents additional types of protection that can be purchased to enhance a policy but does not replace the fundamental protection provided by the primary coverage.