A client is involved in an auto accident where their vehicle sustains $15,000 in damages. The at-fault driver has liability insurance with a property damage limit of $10,000. The client's own policy has Uninsured Motorist Property Damage (UMPD) with a $5,000 limit and a $250 deductible. How much will the client's UMPD coverage pay?
- A$5,000
- B$0, since the at-fault driver has some insurance
- C$4,750
- D$15,000
Show answer & explanationAnswer & explanation
Correct answer: C. $4,750
This scenario involves an underinsured driver (their $10,000 PD limit is less than the client's $15,000 damages). UMPD coverage often applies to underinsured drivers as well. The at-fault driver's policy pays its $10,000 limit. The remaining damages are $15,000 - $10,000 = $5,000. The client's UMPD has a $5,000 limit and a $250 deductible. So, UMPD pays $5,000 (remaining damages) - $250 (deductible) = $4,750.
Why the other options are wrong
- A. This would be the UMPD limit, but the deductible must be applied.
- B. UMPD often includes Underinsured Motorist Property Damage, which applies when the at-fault driver's limits are insufficient.
- D. This is the total damage, but the at-fault driver's policy and the UMPD deductible apply.
Uninsured Motorist Property Damage (UMPD) with Underinsured Aspect
UMPD coverage pays for direct and accidental damage to the insured's vehicle caused by an uninsured motorist. Some policies extend this to include damage caused by an underinsured motorist, meaning a driver whose property damage liability limits are insufficient to cover the insured's damages.
- Covers damage to insured's vehicle.
- Applies when at-fault driver is uninsured OR underinsured (in some policies/states).
- Subject to a deductible.
- Has its own limit.
Memory trick: When the other guy's money runs out, UMPD fills the gap, minus your part.