Uninsured and underinsured motorist 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 at-fault driver carries liability limits of $30,000 per person. The insured’s injury claim is reasonably valued at $80,000. The insured carries underinsured motorist coverage. What does the underinsured motorist coverage address?

   1. AThe full $80,000, because the insured’s own policy responds
   2. BThe shortfall between the at-fault driver’s available limits and the value of the claim, subject to the insured’s own limits
   3. CNothing, because the at-fault driver had insurance
   4. DOnly the medical portion of the claim
   Show answer and reasoning

   Correct answer: B — The shortfall between the at-fault driver’s available limits and the value of the claim, subject to the insured’s own limits

   Underinsured motorist coverage exists precisely to address the gap when an at-fault driver has coverage that is insufficient. It responds to the shortfall rather than duplicating the at-fault carrier’s payment, and the insured’s own underinsured motorist limits cap that recovery. The presence of some liability coverage is what makes this underinsured rather than uninsured.

2. Question 2

   An insured is injured in an accident in which the insured was solely at fault. The insured has uninsured motorist coverage. Is that coverage triggered?

   1. AYes, because the insured has the coverage and was injured
   2. BNo, because uninsured motorist coverage responds to injury caused by an at-fault uninsured driver
   3. CYes, but only up to half the applicable limit
   4. DOnly if the insured also carries collision coverage
   Show answer and reasoning

   Correct answer: B — No, because uninsured motorist coverage responds to injury caused by an at-fault uninsured driver

   Uninsured motorist coverage responds when an at-fault driver lacks liability insurance. Where the insured is solely at fault, there is no at-fault uninsured third party, so the coverage is not triggered. Medical payments or personal injury protection are the coverages that respond without regard to fault.

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

Which coverage applies to a hit-and-run?

Hit-and-run scenarios are commonly addressed under uninsured motorist coverage because no liability coverage can be identified, subject to the specific policy terms in the fact pattern.

Can the insurer recover after paying an uninsured motorist claim?

Where the insurer pays a loss caused by a responsible third party, subrogation rights may allow recovery against that party. The insured must be made whole before the insurer pursues its share.

How do these differ from medical payments coverage?

Medical payments coverage pays covered medical expenses without requiring fault to be established. Uninsured and underinsured motorist coverage require an at-fault third party who cannot fully pay.

Key terms on this topic

• Uninsured motorist coverageUninsured motorist coverage pays the insured for damages caused by an at-fault driver who has no applicable liability insurance.
• Underinsured motorist coverageUnderinsured motorist coverage responds when an at-fault driver carries liability limits that exist but are insufficient to cover the insured’s damages.
• Medical payments coverageMedical payments coverage pays reasonable medical expenses from a covered accident without regard to fault, generally up to a modest stated limit.
• Personal injury protectionPersonal injury protection pays medical expenses and a portion of lost income and replacement services after a covered auto accident, without regard to fault.
• SubrogationSubrogation is the insurer’s right, after paying a covered loss, to pursue recovery from the party legally responsible for causing that loss.
• 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.

Distinctions worth drilling

• 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.
• Subrogation vs. SalvageAfter an insurer pays a claim, it may have ways to recover part of that outlay. Subrogation and salvage are the two principal routes, and they recover from entirely different places.

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.
• Auto liability coverage on the Texas All-Lines examHow split limits work, how bodily injury and property damage liability differ, and why the exam separates liability from first-party auto coverages.
• 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.