Question

An insured had an accident in another state that required liability limits of 25/50/25. Our insured had 10/20/10 limits. What happens if the liability he incurs exceeds 10/20/10?

1) Our insured's license will be revoked since he did not comply with the other state's requirements
2) Our insured's policy will respond to the higher limit of the other state
3) Our insured's policy will pay up to its 10/20/10 limits and the insured will be responsible for any balance
4) None of the above

Answer 1

The insured's policy will cover up to the 10/20/10 limits, and the insured will be responsible for the difference. It's important to note state requirements as they may differ from the limits in the insured's home state policy.

Step-by-step explanation:

If an insured has an accident in another state with liability limits of 25/50/25 and their own policy has 10/20/10 limits, what happens if the liability exceeds their policy limits? The correct answer is that the insured's policy will pay up to its 10/20/10 limits, and the insured will be responsible for any balance. This can be a significant concern as medical costs and property damages can exceed these amounts, leaving the insured financially liable for the difference.

It is important for drivers to be aware of the insurance requirements in the states they travel to, as they may differ from their home state. Also, some insurance policies include a provision that adjusts coverage to meet the minimum requirements of the state where an accident occurs. In this case, however, we are assuming the policy does not adjust and thus would only cover up to the stated limits.