Louisiana P&C Adjuster Practice Exam

Liability limits in a Personal Auto Policy are applied in which manner?

1. Per accident only

2. Per car only

3. Per person and per accident

4. As a flat limit

The correct answer is: Per person and per accident

In a Personal Auto Policy, liability limits are structured to provide coverage for bodily injury and property damage in a way that assesses responsibility based on the number of individuals involved and the circumstances of the accident. The correct answer reflects this by indicating that liability limits are applied both per person and per accident. This means that if an insured vehicle is involved in an accident, the policy's liability limits will apply to each injured individual up to the per person limit. Additionally, there is a total limit applied to all claims for the same accident, which corresponds to the per accident limit. This system ensures comprehensive coverage while also setting caps on the insurer's financial responsibilities, thus protecting both the insured and the insurance company. In contrast, the other options do not capture the complete framework of liability limits. Describing the limits as applied per accident only does not consider the individual claimants. Stating it is per car ignores any multiparty incident where multiple individuals might be involved, and a flat limit fails to acknowledge that different scenarios can have varying injury amounts per individual, which is a key aspect of liability insurance.