Property & Casualty Insurance Exam (National Portion)Casualty InsuranceMedium
A client's Personal Auto Policy (PAP) has Uninsured Motorist (UM) Bodily Injury limits of $50,000 per person / $100,000 per accident. The client is injured by an uninsured driver and sustains $70,000 in bodily injuries. What is the maximum amount the client's UM coverage will pay?
- A$50,000
- B$100,000
- C$0
- D$70,000
Show answer & explanationAnswer & explanation
Correct answer: A. $50,000
Uninsured Motorist (UM) Bodily Injury coverage pays for injuries sustained by an insured when the at-fault driver has no insurance. The coverage is subject to the policy's limits. In this case, the per-person limit is $50,000. Even though the client's injuries are $70,000, the policy will only pay up to the per-person limit of $50,000.
Why the other options are wrong
- B. Incorrect; the per-accident limit applies to multiple injured parties, not a single person.
- C. Incorrect; UM coverage is designed for this scenario.
- D. Incorrect; the payout cannot exceed the per-person limit.
Uninsured Motorist (UM) Payout
Uninsured Motorist (UM) coverage pays for bodily injuries sustained by an insured due to an uninsured at-fault driver, subject to the policy's per-person and per-accident limits.
- Covers bodily injury (and sometimes property damage).
- Applies when the at-fault driver has no insurance.
- Subject to per-person and per-accident limits.
- Does not cover the uninsured driver's injuries.
Memory trick: Uninsured hit? Check the 'person' limit first.