accident attorney Insurance Claims and Coverage 1 — Questions and Answers
Question 1: What does liability insurance cover in an auto accident?
- Damages the policyholder causes to others, including bodily injury and property damage (Correct answer)
- Damage to the policyholder's own vehicle
- The policyholder's own medical bills
- Theft of the policyholder's vehicle
Correct answer: Damages the policyholder causes to others, including bodily injury and property damage
Liability insurance pays for injuries and property damage the insured driver causes to third parties in an accident.
Question 2: What is uninsured motorist (UM) coverage?
- Coverage protecting the insured when injured by a driver who has no liability insurance (Correct answer)
- Coverage for accidents in uninsured parking lots
- Coverage for drivers who let their own policy lapse
- Coverage that replaces all insurance when a driver is uninsured
Correct answer: Coverage protecting the insured when injured by a driver who has no liability insurance
UM coverage allows the insured to recover compensation from their own insurer when the at-fault driver carries no insurance.
Question 3: What is underinsured motorist (UIM) coverage?
- Coverage that pays the difference when the at-fault driver's insurance is insufficient to cover all damages (Correct answer)
- Coverage for drivers who are underinsured themselves
- A government program for low-income drivers
- Coverage applied when the policyholder causes an accident
Correct answer: Coverage that pays the difference when the at-fault driver's insurance is insufficient to cover all damages
UIM coverage fills the gap when the responsible driver's policy limits are lower than the injured party's actual damages.
Question 4: What is a policy limit and why does it matter in accident settlements?
- The maximum amount an insurer will pay under a policy, which caps potential recovery from that insurer (Correct answer)
- The minimum amount required to file a claim
- The time limit for filing an insurance claim
- The deductible amount owed by the insured
Correct answer: The maximum amount an insurer will pay under a policy, which caps potential recovery from that insurer
Policy limits cap the insurer's financial obligation, so damages exceeding the limit must be sought from the defendant personally or through other coverage.
Question 5: What is a bad faith insurance claim?
- A claim that an insurer unreasonably denied, delayed, or undervalued a valid insurance claim (Correct answer)
- A fraudulent claim submitted by the insured
- A claim filed after the statute of limitations has run
- A claim disputed by both parties in arbitration
Correct answer: A claim that an insurer unreasonably denied, delayed, or undervalued a valid insurance claim
Bad faith arises when an insurer fails to fulfill its obligation to handle claims fairly, potentially exposing it to extra-contractual damages.
Question 6: What is a reservation of rights letter from an insurer?
- A notice that the insurer will defend the insured but reserves the right to deny coverage later based on policy terms (Correct answer)
- A letter granting the insured the right to choose their own attorney
- An insurer's agreement to pay the full policy limit
- A denial of the insurance claim
Correct answer: A notice that the insurer will defend the insured but reserves the right to deny coverage later based on policy terms
A reservation of rights letter allows the insurer to investigate a claim while preserving its right to disclaim coverage if a policy exclusion applies.
accident attorney Insurance Claims and Coverage 1
What does liability insurance cover in an auto accident?