Property & Casualty Insurance Exam (National Portion)Casualty InsuranceEasy
A client's Personal Auto Policy (PAP) has 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 uninsured driver. How much will the UMPD coverage pay?
- A$8,000
- B$0
- C$9,750
- D$7,750
Show answer & explanationAnswer & explanation
Correct answer: D. $7,750
UMPD coverage pays for damages to the insured's vehicle caused by an uninsured driver, subject to the policy limit and deductible. The $8,000 in damages minus the $250 deductible equals $7,750, which is within the $10,000 limit.
Why the other options are wrong
- A. Incorrect; the deductible must be applied.
- B. Incorrect; UMPD covers damages from an uninsured driver.
- C. Incorrect; this calculation is not relevant to the given figures.
Uninsured Motorist Property Damage (UMPD)
Coverage in a Personal Auto Policy (PAP) that pays for damages to the insured's vehicle when the at-fault driver is uninsured. It typically includes a deductible.
- Covers direct and accidental damage to the insured's vehicle.
- Applies only when the at-fault driver is uninsured.
- Subject to a policy limit and a deductible.
Memory trick: UMPD is like fixing your car after a 'ghost driver' hit-and-run, but you still pay a small 'ghost tax' (deductible).