Property & Casualty Insurance Exam (National Portion)Casualty InsuranceMedium
A client has a Personal Auto Policy (PAP) with Uninsured Motorist (UM) Bodily Injury limits of $50,000 per person / $100,000 per accident. The client is severely injured in an accident caused by an uninsured driver, incurring $75,000 in medical bills and lost wages. How much will the client's UM coverage pay?
- A$100,000
- B$50,000
- C$75,000
- D$0, as the driver was uninsured
Show answer & explanationAnswer & explanation
Correct answer: B. $50,000
Uninsured Motorist (UM) coverage protects the insured when the at-fault driver has no insurance. The UM bodily injury limits apply in the same way as liability limits. Since the per-person limit is $50,000, and the client's damages are $75,000, the policy will pay the maximum per-person limit of $50,000.
Why the other options are wrong
- A. This is the per-accident limit, which would apply if multiple people were injured, but the per-person limit still caps the payment for one individual.
- C. This is the total amount of damages, which exceeds the per-person limit.
- D. UM coverage is specifically designed to pay when the at-fault driver is uninsured.
Uninsured Motorist (UM) Bodily Injury
Coverage in an auto policy that pays for the insured's bodily injuries, and sometimes property damage, when caused by an at-fault driver who does not have liability insurance or is a hit-and-run driver.
- Protects insured from uninsured drivers.
- Covers bodily injury (and sometimes property damage).
- Limits often mirror liability limits.
Memory trick: When the other car disappears or has no money, UM steps in.