Question 40

The insurer will not pay for losses when a person uses the insured's covered auto to carry others for a fee.

Under Part A - Liability Coverage of the Personal Auto Policy, the insurer specifically excludes coverage for situations where the insured's vehicle is used for commercial purposes, such as carrying others for a fee. This makes option C the correct answer.

A) When the insured is legally responsible for the auto accident

This option is incorrect because the insurer will pay for losses if the insured is found legally responsible for an auto accident. Liability coverage is designed to cover the insured's legal obligations in such situations.

B) When a person using a covered auto has reasonable belief that he or she is entitled to do so

This option is incorrect as well. The insurer provides coverage in situations where the user of the covered auto has a reasonable belief of entitlement. This can include instances where the user has permission from the insured.

C) When a person uses the insured's covered auto to carry others for a fee

This option is correct. The Personal Auto Policy explicitly excludes coverage for losses incurred when the insured’s vehicle is used for commercial purposes, such as transporting people for a fee. This creates a significant liability risk that the insurer does not cover.

D) When the named insured uses a covered auto owned by a family member

This option is incorrect because the policy typically extends coverage to family members who operate a covered vehicle. The insurer will pay for losses in this context, as long as the use of the vehicle aligns with the policy's terms.

Conclusion

The correct answer, C, highlights the exclusion of coverage for commercial use of the insured's vehicle, which is a critical aspect of liability coverage under the Personal Auto Policy. In contrast, options A, B, and D are situations where coverage is provided, reinforcing the understanding that the insurer protects against personal liability but not commercial risks.