Arkansas Insurance Adjuster Practice Exam 2025 – Comprehensive All-in-One Guide to Exam Success

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What does the insuring agreement for Part A-Liability in a personal auto policy state regarding settling liability cases?

The insurer has the right to settle liability cases out of court

The insuring agreement for Part A-Liability in a personal auto policy states that the insurer has the right to settle liability cases out of court. This means that the insurance company can choose to resolve a liability claim without going to court, if they believe it is in the best interest of the insured and the company. Option B is incorrect because it states that the insurer will cover costs for subsequent lawsuits, but not necessarily for settling the initial case. Option C is also incorrect as it only mentions coverage for court-related costs and not the right to settle out of court. Option D is incorrect because it is a general statement about what the insurer will cover, not specifically related to settling liability cases.

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The insurer will cover the costs to defend the insured in court in subsequent lawsuits related to the same occurrence, even after the policy limit is reached

The insurer will cover the costs to defend the insured in court, up to the policy limit

The insurer will pay for 'bodily injury' or 'property damage' to any 'insured' because of an auto accident

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