Property & Casualty Insurance Exam (National Portion)Casualty InsuranceMedium
An insured driver causes an accident, resulting in $15,000 in bodily injury to another party. The insured's auto policy has a bodily injury liability limit of $25,000 per person / $50,000 per accident. The policy also includes Supplementary Payments. Which of the following would be covered under Supplementary Payments, in addition to the $15,000 bodily injury payment?
- AMedical expenses for the insured driver's injuries sustained in the accident.
- BLost wages incurred by the insured while attending court at the insurer's request.
- CThe cost of a rental car for the injured third party while their vehicle is repaired.
- DThe insured's deductible for their own vehicle's damage.
Show answer & explanationAnswer & explanation
Correct answer: B. Lost wages incurred by the insured while attending court at the insurer's request.
Supplementary Payments in an auto policy cover specific expenses beyond the liability limits, such as the insured's lost wages for attending court at the insurer's request, bail bonds, and defense costs.
Why the other options are wrong
- A. Medical expenses for the insured driver are covered by Medical Payments coverage or Personal Injury Protection (PIP), not supplementary payments for liability to others.
- C. Rental car costs for the injured third party's vehicle are typically covered under the property damage liability portion, not supplementary payments.
- D. Deductibles are part of the insured's own physical damage coverage, not supplementary payments for liability.
Supplementary Payments (Auto)
Additional payments made by an auto insurer on behalf of an insured, beyond the policy's liability limits, for specific expenses related to a covered loss.
- Paid in addition to liability limits.
- Commonly include defense costs, bail bonds, and lost wages for court appearances.
- Also cover appeal bonds and interest on judgments.
- Designed to support the insured's legal defense and obligations.
Memory trick: Supplementary Shield for Legal Support.