Florida 2-20 General Lines Agent (Property, Casualty, Commercial Lines and Florida Law)Casualty InsuranceEasy
A small manufacturing company, ABC Corp., has a Business Auto Policy (BAP). One of their delivery trucks, driven by an employee, is involved in an accident while making a delivery. The accident causes significant damage to another vehicle and injuries to its occupants. Which of the following coverages under ABC Corp.'s BAP would typically respond to the damages and injuries sustained by the occupants of the other vehicle?
- ALiability Coverage
- BUninsured Motorists Coverage
- CPhysical Damage Coverage
- DMedical Payments Coverage
Show answer & explanationAnswer & explanation
Correct answer: A. Liability Coverage
Liability Coverage under a Business Auto Policy pays for damages and injuries that the insured is legally obligated to pay to others due to an auto accident caused by the insured's vehicle or driver.
Why the other options are wrong
- B. Uninsured Motorists Coverage protects the insured if they are hit by an uninsured or underinsured driver, which is not the scenario described.
- C. Physical Damage Coverage pays for damage to the insured's vehicle, not damage to third-party vehicles or injuries.
- D. Medical Payments Coverage typically pays for medical expenses of the insured and their passengers, not third parties.
Business Auto Policy (BAP) - Liability
BAP Liability Coverage pays for bodily injury and property damage to others for which the insured is legally responsible due to an auto accident.
- Covers legal obligations to third parties.
- Includes defense costs.
- Applies to owned, hired, and non-owned autos.
Memory trick: BAP covers the business's 'L.M.P.U.' for 'Liability, Med, Physical, Uninsured' needs.