Property & Casualty Insurance Exam (National Portion)Casualty InsuranceMedium
A client has a Personal Auto Policy (PAP) with Uninsured Motorist Property Damage (UMPD) coverage with a limit of $10,000 and a $250 deductible. The client's vehicle sustains $8,000 in damages after being hit by an identifiable uninsured driver. How much will the UMPD coverage pay?
- A$0
- B$8,000
- C$7,750
- D$9,750
Show answer & explanationAnswer & explanation
Correct answer: C. $7,750
Uninsured Motorist Property Damage (UMPD) coverage pays for damages to an insured's vehicle caused by an uninsured driver, subject to a deductible and policy limits. In this case, the damages are $8,000, which is less than the $10,000 limit. The deductible of $250 will be applied to the damages. So, the UMPD coverage will pay $8,000 (damages) - $250 (deductible) = $7,750.
Why the other options are wrong
- A. Incorrect; UMPD is designed to cover this type of loss.
- B. Incorrect; this amount does not account for the deductible.
- D. Incorrect; this would be the payout if damages were $10,000 and a $250 deductible applied, but damages are only $8,000.
UMPD Payout with Deductible
Uninsured Motorist Property Damage (UMPD) coverage pays for damage to the insured's vehicle by an uninsured driver, typically after applying a deductible and up to the policy limit.
- Covers property damage caused by an uninsured driver.
- Requires the uninsured driver to be identifiable in some states.
- Subject to a policy deductible.
- Limited by the policy's UMPD limit.
Memory trick: Damage minus deductible, then check the limit.