Sally has a personal automobile policy with a $300,000 underinsured motorist limit. She is struck by an at-fault driver with a $100,000 automobile liability limit. Sally's Bodily Injury Damages are determined to be $250,000. How much will Sally's Underinsured Motorist Insurance cover?

Rationale

$150,000 will be covered by Sally's Underinsured Motorist Insurance.

Sally's Underinsured Motorist Insurance will cover the difference between her bodily injury damages and the at-fault driver's liability limit, ensuring she receives compensation up to her policy limit.

A ($50,000) YOUR ANSWER

This amount does not accurately reflect the difference between Sally's damages and the at-fault driver's coverage. It underestimates the total coverage by ignoring the available limits and damages incurred.

B ($100,000) YOUR ANSWER

While this option reflects the at-fault driver's liability limit, it does not consider the total bodily injury damages incurred by Sally. The amount is insufficient to cover the gap between her damages and the driver's limits.

C ($150,000) CORRECT

This is the correct answer as it accounts for the total damages incurred by Sally of $250,000 minus the at-fault driver's liability limit of $100,000. Thus, $250,000 - $100,000 equals $150,000, which is the amount covered by her Underinsured Motorist Insurance.

D ($250,000) YOUR ANSWER

This choice misrepresents the coverage as it suggests that Sally's entire bodily injury damages will be covered. However, since the at-fault driver has a liability limit of $100,000, only the difference after accounting for this limit is payable under Sally's policy.

Conclusion

Sally's Underinsured Motorist Insurance plays a crucial role in ensuring she receives adequate compensation when struck by an underinsured driver. In this case, she is eligible for $150,000, which compensates the difference between her damages and the at-fault driver's liability limit, thereby strengthening her financial protection in the event of an accident.

Sally has a personal automobile policy with a $300,000 underinsured motorist limit. She is struck by an at-fault driver with a $100,000 automobile liability limit. Sally's Bodily Injury Damages are determined to be $250,000. How much will Sally's Underinsured Motorist Insurance cover?

$150,000 will be covered by Sally's Underinsured Motorist Insurance.

Related Questions

Related Quizzes

How familiar were you with this question?

Report an Issue

Rate this Practice Test