Property & Casualty Insurance Exam (National Portion)Casualty InsuranceEasy
A client has a Personal Auto Policy (PAP) with a bodily injury liability limit of $25,000 per person / $50,000 per accident. The insured causes an accident injuring two people for $30,000 and $15,000 respectively. How much will the policy pay for the person with $30,000 in injuries?
- A$45,000
- B$30,000
- C$25,000
- D$15,000
Show answer & explanationAnswer & explanation
Correct answer: C. $25,000
The policy has a per-person limit of $25,000. Even though one person sustained $30,000 in injuries, the policy will only pay up to its per-person limit for that individual, which is $25,000.
Why the other options are wrong
- A. Incorrect; this is the total for both injured parties, which isn't what the question asks for regarding a single person.
- B. Incorrect; this is the actual injury amount, but it exceeds the per-person limit.
- D. Incorrect; this is the amount for the other injured person.
Per-Person Bodily Injury Limit
The maximum amount an auto liability policy will pay for bodily injuries sustained by any one person in a single accident, regardless of the total number of people injured or the overall accident costs.
- Applies individually to each person injured.
- Cannot be exceeded for a single person's claim.
- Part of split liability limits (per person/per accident).
Memory trick: The 'per-person' limit is like a personal injury budget for each individual hurt in an accident.