Property & Casualty Insurance Exam (National Portion)Casualty InsuranceEasy
A client's auto policy includes a Supplementary Payments clause. Which of the following expenses would typically be covered under this clause in addition to the policy's liability limits?
- ALoss of earnings for the insured while recovering from injuries
- BMedical bills for the insured's injuries
- CDamage to the insured's own vehicle
- DCost of bail bonds required because of a covered accident
Show answer & explanationAnswer & explanation
Correct answer: D. Cost of bail bonds required because of a covered accident
Supplementary Payments in an auto policy cover specific expenses related to a liability claim, such as bail bonds, defense costs, and loss of earnings for attending hearings, in addition to the stated liability limits. They do not cover damage to the insured's vehicle, the insured's own medical bills, or loss of earnings due to the insured's recovery.
Why the other options are wrong
- A. Supplementary Payments cover loss of earnings for attending trials or hearings at the insurer's request, not for recovering from injuries.
- B. This is covered by Medical Payments coverage or the insured's health insurance, not Supplementary Payments.
- C. This is covered by Collision or Comprehensive coverage, not Supplementary Payments.
Supplementary Payments (Auto)
Additional coverages in an auto liability policy that pay for specific expenses related to a covered loss, such as defense costs, bail bonds, and reasonable expenses incurred at the insurer's request, which do not reduce the policy's stated liability limits.
- Paid in addition to liability limits.
- Includes defense costs.
- Covers bail bonds.
- Covers loss of earnings for court appearances.
Memory trick: Extra help, not part of the main liability pie.