Property & Casualty Insurance Exam (National Portion)Casualty InsuranceEasy
A client has a Personal Auto Policy (PAP) with liability limits of $50,000 per person / $100,000 per accident for bodily injury, and $25,000 for property damage. The client causes an accident, injuring one person for $70,000 and causing $10,000 in property damage. How much will the policy pay for the injured person's bodily injuries?
- A$50,000
- B$100,000
- C$70,000
- D$60,000
Show answer & explanationAnswer & explanation
Correct answer: A. $50,000
The policy has a per-person bodily injury limit of $50,000. Although the injured person's damages are $70,000, the policy will only pay up to the per-person limit.
Why the other options are wrong
- B. This is the per-accident limit, which applies to the total bodily injury for all persons, but the per-person limit still caps individual payouts.
- C. This amount exceeds the per-person limit of $50,000.
- D. This calculation does not align with the policy limits or the loss.
Per-Person Bodily Injury Limit
The maximum amount an auto liability policy will pay for bodily injury sustained by any one person in a single accident.
- Applies to each individual injured party.
- Is a component of split limits.
- Cannot be exceeded, regardless of the actual damages incurred by that person.
Memory trick: Each person gets their own 'wallet' from the policy, and it has a fixed limit.