Texas General Lines — Property and CasualtyPersonal LinesMedium
A client has a Personal Auto Policy (PAP) with Collision coverage and a $500 deductible. They are involved in an accident where they are at fault, and their car sustains $3,000 in damages. The other driver's car sustains $2,000 in damages. How much will the client's PAP pay for their own car's damages?
- A$2,500
- B$0
- C$2,000
- D$3,000
Show answer & explanationAnswer & explanation
Correct answer: A. $2,500
Collision coverage pays for damages to the insured's own car, regardless of fault, after the deductible is applied. The damage to the client's car is $3,000, and their deductible is $500. Therefore, the policy will pay $3,000 - $500 = $2,500 for their own car's damages. The other driver's damages would be covered under the client's Liability coverage, which is a separate coverage.
Why the other options are wrong
- B. This is incorrect; collision coverage is active for the insured's vehicle.
- C. This incorrectly deducts $1,000 or confuses the other driver's damages with the insured's payout.
- D. This is incorrect; the deductible must be applied to the loss before payout.
PAP Collision Coverage
Collision coverage in a Personal Auto Policy pays for damage to the insured's own vehicle resulting from an upset or impact with another vehicle or object, regardless of fault, after the deductible is met.
- Covers damage to the insured's vehicle.
- Applies regardless of who is at fault.
- Subject to a deductible, which is the amount the insured pays out of pocket.
Memory trick: Collision coverage helps 'C'over your 'C'ar after a 'C'rash, minus the 'D'eductible.