Auto liability coverage on the Texas All-Lines exam

High-yield rules

Practice questions

Written the way the examination builds items. Answer before opening the explanation.

1. Question 1

   An insured with 30/60/25 split limits causes an accident injuring two people, with claims evaluated at $40,000 and $15,000, and causing $30,000 of damage to the other vehicle. What is the maximum the liability coverage pays?

   1. A$70,000
   2. B$85,000
   3. C$60,000
   4. D$75,000
   Show answer and reasoning

   Correct answer: A — $70,000

   The first claimant is capped at the $30,000 per-person limit rather than $40,000. The second claimant’s $15,000 is below the per-person limit and is paid in full. Those total $45,000, which is under the $60,000 per-accident limit, so no further reduction applies. Property damage of $30,000 is capped at the separate $25,000 limit. Total is $45,000 plus $25,000, or $70,000.

2. Question 2

   An insured’s vehicle is damaged when they strike a pole in a single-vehicle accident. Which coverage responds?

   1. AProperty damage liability, because a vehicle sustained property damage
   2. BCollision coverage, because the damage is to the insured’s own vehicle
   3. CBodily injury liability, if the insured was injured
   4. DUninsured motorist coverage, because no other driver was involved
   Show answer and reasoning

   Correct answer: B — Collision coverage, because the damage is to the insured’s own vehicle

   Damage to the insured’s own vehicle from impact is a first-party physical damage loss addressed by collision coverage. Property damage liability pays for damage the insured causes to a third party’s property, not their own vehicle. Uninsured motorist coverage addresses injury caused by an at-fault uninsured driver, which is not the scenario described.

3. Question 3

   A vehicle strikes another car while being used for deliveries. What must be identified first?

   1. AThe driver’s favorite repair shop
   2. BThe policy form, covered auto, driver, and business use
   3. CThe claimant’s mortgage
   4. DThe building coinsurance percentage
   Show answer and reasoning

   Correct answer: B — The policy form, covered auto, driver, and business use

   Vehicle, driver, use, and policy facts determine the auto analysis. This original, source-mapped item is provided for concept practice and is not recalled exam content.

Frequently asked

What do the three numbers in a split limit mean?

Bodily injury per person, bodily injury per accident, and property damage per accident. Working through them in that order prevents the most common calculation errors.

Does the per-accident limit ever reduce a single claimant’s recovery?

Not on its own, because the per-person limit is lower and applies first. The per-accident limit matters when the capped totals of multiple claimants together exceed it.

Which coverage applies when the at-fault driver has no insurance?

Uninsured motorist coverage addresses that scenario, and underinsured motorist coverage addresses an at-fault driver whose limits are insufficient. Neither is the insured’s own liability coverage.

Key terms on this topic

• Liability limitsLiability limits cap what an insurer pays for covered liability, expressed either as split limits for each person and each accident or as a single combined limit for all covered damages.
• Bodily injuryBodily injury is physical harm to a person, including sickness or disease and, where the policy so provides, death resulting from that harm.
• Property damageProperty damage in liability terms is physical injury to tangible property, including resulting loss of use, for which the insured may be legally responsible.
• Collision coverageCollision coverage pays for damage to the insured’s own vehicle from impact with another vehicle or object, or from upset of the vehicle.
• Comprehensive coverageComprehensive coverage, often called other than collision, pays for damage to the insured’s own vehicle from causes such as theft, fire, hail, glass breakage, vandalism, and contact with an animal.
• Uninsured motorist coverageUninsured motorist coverage pays the insured for damages caused by an at-fault driver who has no applicable liability insurance.

Distinctions worth drilling

• Bodily Injury vs. Property DamageLiability policies commonly divide covered consequences into bodily injury and property damage, each with its own definition and often its own limit. Misclassifying the harm leads to the wrong limit and the wrong analysis.
• First-Party vs. Third-Party ClaimsFirst-party and third-party describe who is making the claim relative to the insurance contract. The distinction changes the duties owed, the coverage analyzed, and the shape of the investigation.

More in casualty and liability

• Negligence elements and liability analysis on the Texas All-Lines examThe four elements of negligence, why the exam builds fact patterns where exactly one fails, and how to test each element in order.
• Liability damages categories on the Texas All-Lines examHow the exam sorts documented economic loss, evaluative non-economic harm, and conduct-based punitive awards into three distinct categories.
• Uninsured and underinsured motorist coverage on the Texas All-Lines examHow these first-party coverages respond when the at-fault driver cannot pay, and why fault still has to be established.
• Personal liability coverage on the Texas All-Lines examHow the liability section of a homeowners policy responds to third-party claims, and how medical payments to others differs from liability.
• Commercial general liability fundamentals on the Texas All-Lines examHow CGL responds to premises, operations, and products exposures, and why occurrence versus claims-made determines which policy answers.
• Workers compensation fundamentals on the Texas All-Lines examWhy the no-fault structure replaces negligence analysis, and how the arising out of and in the course of employment test drives compensability.