Property and Casualty Insurance Practice Exam

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In regards to Coverage Limits, what does '20/50/10' signify?

$20,000 for property damage only
Maximum payout amounts for bodily injury and property damage
$20,000 per individual, $50,000 total per accident, $10,000 for additional expenses
Total maximum for all claims regardless of type

The correct answer is: Maximum payout amounts for bodily injury and property damage

The notation '20/50/10' is a common way to express coverage limits in auto insurance policies. It represents the maximum amounts that will be paid out for different types of claims resulting from an accident. Specifically, the first number (20) indicates the maximum amount that will be paid for bodily injury per individual, the second number (50) denotes the total maximum amount for bodily injury per accident, regardless of the number of people injured, and the third number (10) specifies the maximum payout for property damage. By interpreting the coverage limits in this way, it’s clear that the notation effectively outlines the different maximum payment amounts for bodily injury and property damage. Understanding this format is crucial for policyholders as it helps them gauge the extent of their coverage and what financial protection they can expect in the event of an accident.