88. Sally has a personal automobile policy with a $300,000 underinsured motorist limit. She is struck by an at-fault driver with a $100,000 automobile liability limit. Sally's Bodily Injury Damages are determined to be $250,000. How much will Sally's Underinsured Motorist Insurance cover?
Answer: C
Sally's Underinsured Motorist Insurance will cover $150,000.
Sally's Underinsured Motorist Insurance will cover the difference between her bodily injury damages and the at-fault driver's liability limit, up to her policy's limit. Since her damages are $250,000 and the at-fault driver has a liability limit of $100,000, Sally can claim the remaining amount from her underinsured motorist coverage.
A) $50,000
This option is incorrect because it does not account for the total damages incurred by Sally. If the underinsured motorist coverage were to only cover $50,000, it would imply that Sally's damages were significantly lower than they actually are, which is not the case.
B) $100,000
This option is also incorrect as it suggests that Sally's underinsured motorist insurance would cover exactly the liability limit of the at-fault driver. However, this does not fully address her total bodily injury damages of $250,000 and would leave her undercompensated.
C) $150,000
This option is correct because Sally's total bodily injury damages amount to $250,000, while the at-fault driver's liability coverage is $100,000. The difference, which is $150,000, is what Sally's underinsured motorist insurance will cover, fitting within her policy limit.
D) $250,000
This option is incorrect because it suggests that Sally's underinsured motorist insurance will cover her entire bodily injury damages. However, she can only claim the amount exceeding the at-fault driver's liability limit, which is $150,000.
Conclusion
Sally's Underinsured Motorist Insurance covers $150,000 because it accounts for the difference between her total damages and the at-fault driver's liability coverage. The other options either underestimate or misinterpret the coverage available, failing to consider the actual calculations based on the limits provided.