Property & Casualty Insurance Exam (National Portion)Casualty InsuranceEasy
An insured driver has an auto policy with bodily injury liability limits of $25,000 per person / $50,000 per accident. The insured causes an accident that results in $30,000 in bodily injury to one person. The at-fault driver is found legally liable for the full $30,000. How much will the insured's policy pay for this claim?
- A$30,000
- B$25,000
- C$0, as the claim exceeds the per-person limit
- D$50,000
Show answer & explanationAnswer & explanation
Correct answer: B. $25,000
The policy's per-person bodily injury limit is $25,000. Even though the injured party's damages are $30,000, the policy will only pay up to its stated per-person limit for any single individual.
Why the other options are wrong
- A. This would be the full amount of damages, which exceeds the per-person limit.
- C. The policy will pay up to its limit; it does not pay nothing if the claim exceeds the limit.
- D. This is the per-accident limit, which applies when multiple people are injured, but the per-person limit still applies to each individual.
Per-Person Liability Limit
The maximum amount an insurance policy will pay for bodily injury to any one person injured in a single accident, regardless of the total damages incurred by that individual.
- Applies to bodily injury to one individual.
- Does not include property damage.
- Is a component of split liability limits.
Memory trick: One person, one ceiling.