Other Than Life (OTL) Practice Exam

Which statement regarding newly acquired autos is TRUE?

1. A newly acquired auto is automatically insured for a specified period of time if it replaces another insured vehicle of similar type

2. It is not possible to insure more than one vehicle on the same policy

3. An auto with a trailer attached is considered two vehicles

4. All newly acquired vehicles must be reported to the insurer within 24 hours

The correct answer is: A newly acquired auto is automatically insured for a specified period of time if it replaces another insured vehicle of similar type

The statement about newly acquired autos being automatically insured for a specified period is accurate because many auto insurance policies provide coverage for newly acquired vehicles as long as the vehicle replaces one that is already insured and is of a similar type. This feature ensures that policyholders have immediate coverage for their new vehicle without needing to go through the process of updating their policy right away. The specific duration of this automatic coverage may vary depending on the insurance company's policy terms, but it typically includes a grace period—often ranging from 14 to 30 days—allowing the insured time to formally report the new vehicle to the insurer and complete any necessary paperwork. This provision helps to facilitate a seamless transition for insured individuals when they acquire new vehicles. The other options present scenarios that are not standard in most auto insurance policies. For example, it's perfectly feasible to insure multiple vehicles under the same policy through multi-car discounts or coverage extensions, which contradicts the second choice. The third choice about an auto with a trailer being considered two vehicles is not in line with typical insurance practices where a trailer is usually covered under the vehicle's insurance policy rather than requiring separate coverage. Lastly, the requirement for all newly acquired vehicles to be reported within 24 hours is not a universally applicable rule