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Hong KongTexas Personal Lines Auto Liability Practice Questions
These original auto liability questions test third-party bodily injury and property damage, split limits, defense duties, and Texas financial responsibility.
- Liability coverage addresses an insured’s covered legal responsibility to others; it does not repair the insured’s own car.
- Read who is insured, what vehicle was involved, the applicable limit, and every exclusion stated in the scenario.
On this page7 sections
- Question 1: Two injured people and a split limit
- Question 2: A damaged storefront and an injured driver
- Question 3: The insured’s own vehicle is damaged
- Question 4: A permissive driver borrows the car
- Question 5: Liability and a lawsuit
- Question 6: Texas minimum limits and excess damages
- A short checklist for each liability item
The Texas Personal Lines outline includes personal auto coverage and liability concepts. This practice set uses fresh scenarios rather than copied Pearson questions. The central habit is to identify the claimant and damage first. Bodily injury and property damage may share an accident but have different limit buckets under split limits. The policy’s insured definition, covered auto terms, exclusions, and defense language still matter.
- Liability purpose
- Protects an insured against covered legal responsibility to others arising from an auto accident
- BI
- Bodily injury liability addresses covered injury claims by others
- PD
- Property damage liability addresses covered damage to others’ property
- Texas minimum
- Current financial-responsibility minimum commonly shown as 30/60/25; verify current law and policy limits
- Limit reading
- Split limit per person / per accident BI / PD per accident
- Not covered by liability
- Damage to the insured’s own auto is generally a physical-damage issue, not liability
| Question cue | Start with | Common trap |
|---|---|---|
| Passenger injury | Who is legally responsible and is the person an insured or claimant? | Using per-accident limit as the per-person limit |
| Damaged fence or car | Property damage claim and PD limit | Using bodily injury limits for property |
| Insured’s own vehicle | Collision/other-than-collision coverage, if purchased | Trying to pay first-party damage from liability coverage |
| Borrowed car | Policy definition, permission, exclusions, other insurance | Assuming every borrowed auto has identical coverage |
| Defense demand | Policy defense/settlement terms and covered suit | Treating a liability limit as the insurer’s defense-cost cap |
Question 1: Two injured people and a split limit
An insured driver negligently causes a crash. Two occupants of the other vehicle each have covered bodily injury damages of $24,000. The insured’s split bodily injury limits are $30,000 per person and $60,000 per accident. No other coverage or issue is stated. What is the maximum the liability limits could provide for these two claims together?
| Choice | Reasoning |
|---|---|
| A. $30,000 total because that is the per-person limit. | Incorrect. The per-person limit caps payment for one injured person; two separate claimants can fall within the per-accident aggregate. |
| B. $48,000, subject to liability and policy terms. | Correct. Each $24,000 claim is below the $30,000 per-person cap, and their combined $48,000 is below the $60,000 per-accident cap. |
| C. $60,000 for each injured person. | Incorrect. The $60,000 limit applies to the accident total, not each claimant. Reading the slash limits in the wrong order inflates coverage. |
| D. $24,000 total because the insurer pays only the smallest claim. | Incorrect. The existence of multiple injury claimants does not reduce all claims to the lowest one. Each claim is evaluated under the limit structure and policy conditions. |
The calculation uses both limits. Always test each person’s claim against the first number and the combined injury claims against the second. A 30/60 limit does not promise that every claimant receives full damages; if aggregate claims exceed the accident cap, allocation and settlement practices can matter. Property damage is a separate limit in a 30/60/25 notation.
Question 2: A damaged storefront and an injured driver
The same at-fault crash injures one driver for $18,000 and damages a storefront window for $12,000. The policy has a $30,000 per-person BI limit, a $60,000 per-accident BI limit, and a $25,000 PD per-accident limit. Assuming liability is established and no other issue applies, which limit applies to the window?
| Choice | Reasoning |
|---|---|
| A. The $25,000 property damage limit. | Correct. A storefront window is property damage to someone else’s property. The $12,000 claim falls below the stated per-accident PD limit. |
| B. The $30,000 BI per-person limit. | Incorrect. That cap applies to one person’s bodily injury, not physical damage to a building. |
| C. The $60,000 BI per-accident limit. | Incorrect. That limit aggregates bodily injury claims in an accident. It is not a combined single limit and does not absorb PD in this split-limit policy. |
| D. No auto liability coverage because the storefront was not a vehicle. | Incorrect. Property damage liability can apply to covered damage to another person’s property, not only another car, subject to policy terms. |
A crash can create both bodily injury and property damage claims, and each must be placed in the correct bucket. A policy with separate BI and PD limits does not combine them unless the contract specifies a combined single limit. Here the window claim is within PD limits, but a different amount could exceed that cap and leave the insured potentially responsible for the excess.
Question 3: The insured’s own vehicle is damaged
A driver backs into a garage door at the insured’s home and also damages the insured’s own vehicle. There is no other injured person. The driver asks whether auto property damage liability will pay to repair the car. Which answer is best?
| Choice | Reasoning |
|---|---|
| A. No; liability PD is for covered damage to others’ property, while the insured’s auto requires applicable physical-damage coverage. | Correct. The auto’s own damage is a first-party physical-damage claim. Collision or other-than-collision coverage may apply depending on cause and coverage purchased. |
| B. Yes; property damage coverage always covers any property damaged in an accident. | Incorrect. The word ‘property’ does not erase the distinction between third-party liability and the insured’s own vehicle. |
| C. Pay under BI because the driver was in the vehicle. | Incorrect. No bodily injury is described, and BI coverage protects against covered injury claims by others. |
| D. Pay under medical payments because the garage door was damaged. | Incorrect. Medical payments addresses qualifying medical expenses, not property damage to a garage door or the insured’s auto. |
Ask ‘whose property?’ before choosing a coverage. The garage door belongs to someone else and may fall under PD liability if the insured is legally responsible and no exclusion applies. The insured’s car is their own property and calls for collision or other physical-damage coverage. The repair facility or homeowner may also pursue a claim against the driver.
Question 4: A permissive driver borrows the car
The named insured lets a friend borrow the covered car for a short errand. The friend negligently injures another motorist. The policy defines permissive users as insureds for covered use and contains no applicable exclusion. What is the best analysis?
| Choice | Reasoning |
|---|---|
| A. The friend may qualify as an insured under the stated definition, subject to policy terms and limits. | Correct. The question expressly states permission and an insured definition extending to permissive users. |
| B. Only the named insured can ever be an insured under personal auto liability. | Incorrect. Personal auto forms commonly define additional insured persons, including certain permissive users. The actual definition controls. |
| C. The friend is covered under UM because the other motorist was injured. | Incorrect. UM/UIM addresses injury or damage caused by an uninsured or underinsured motor vehicle, not liability of the at-fault permissive driver under this scenario. |
| D. Permission automatically gives the friend unlimited liability limits. | Incorrect. Insured status does not eliminate policy limits, exclusions, or other insurance provisions. The stated policy limits continue to apply. |
Permission is relevant but not the only question. A real policy may restrict coverage based on regular use, household status, business use, or other exclusions. Another policy may also apply. The scenario supplies the definition and removes exclusions so you can test the insured-person concept rather than guess at form-specific exceptions.
Question 5: Liability and a lawsuit
A third party sues an insured over injuries allegedly caused by an auto accident. The complaint seeks damages above the policy limit. The policy requires the insurer to defend a covered suit and gives it settlement rights. Which statement is best?
| Choice | Reasoning |
|---|---|
| A. The insurer may have a duty to defend a covered suit, while indemnity is subject to limits and policy terms. | Correct. Defense and payment of damages are related but distinct obligations. The stated policy language establishes the defense premise. |
| B. The insurer must pay every amount demanded because it is defending the suit. | Incorrect. A defense does not expand the liability limit or guarantee that the claimant proves the demanded damages. |
| C. The suit is not covered because it requests more than the limit. | Incorrect. A demand exceeding limits does not by itself erase a defense duty for an otherwise covered suit. |
| D. The insured can settle without telling the company because the claim exceeds limits. | Incorrect. The policy’s cooperation and settlement provisions may require insurer involvement. The insured should promptly forward suit papers and follow the contract. |
The exam distinction is duty to defend versus duty to indemnify, when the outline or policy wording introduces it. Defense may continue while liability and damages are litigated; indemnity is limited to covered sums, subject to the contract. Never advise a customer to ignore suit papers or settle unilaterally without reviewing the policy and obtaining qualified help.
Question 6: Texas minimum limits and excess damages
A driver carries only the commonly stated Texas minimum split liability limits. A crash causes another person $50,000 in bodily injury damages, and the insured is found liable. Which statement is most accurate?
| Choice | Reasoning |
|---|---|
| A. The insurer pays the full $50,000 because the accident was covered. | Incorrect. The insurer’s obligation is subject to the per-person limit. Covered damages can exceed purchased limits. |
| B. The insurer’s payment is capped by the applicable per-person limit, and the insured may remain exposed to damages above available coverage. | Correct. Texas financial-responsibility minimums establish a required floor, not a promise that every liability claim will be fully funded. |
| C. The state pays the excess through the guaranty association. | Incorrect. The guaranty association is not a general excess-liability fund for an insured driver’s damages beyond purchased limits. |
| D. The claimant must use the insured’s collision coverage. | Incorrect. Collision covers the insured’s own vehicle, not another claimant’s bodily injury damages. |
A minimum limit is not a recommendation that it is adequate for every exposure. The insured may be personally responsible for legally owed damages beyond policy limits. For a current exam, confirm the current Transportation Code financial-responsibility amounts in the outline and law. The 30/60/25 notation describes separate caps; do not assume it is a combined single limit.
A short checklist for each liability item
Mark the claimant, damage type, insured person, involved auto, permission or use, policy exclusion, and limit. Then decide whether the policy’s legal-responsibility trigger is met. If it is a suit, separately consider defense language. This avoids common slips: paying first-party damage under liability, applying BI limits to property, or multiplying a per-person limit by the number of passengers without applying the accident cap.
TDI’s consumer auto guide explains liability, minimum limits, and other auto coverages. Chapter 601 of the Transportation Code establishes financial responsibility requirements; the policy determines the available contractual protection above or alongside those requirements. Pearson’s current outline sets exam scope. The examples state assumptions so each has a single best answer.
Question review: if three people are injured and each has damages below the per-person limit, total those claims and compare the combined amount to the per-accident bodily injury cap. If one person’s damages exceed the per-person limit, do not assign that person the entire aggregate cap without checking the policy’s limit structure and other claimants. A settlement can also involve insurer control, claimant releases, and competing demands. The arithmetic question usually isolates the limit; a real settlement requires claim-specific handling.
Texas liability requirements are a financial-responsibility floor. A consumer may choose or obtain higher limits, and a lender may require physical-damage coverages for a financed vehicle. A question about the legal minimum should not be answered with the insured’s purchased limit unless the stem states it. A question about a policy payment should use the declarations. Separate “what the law requires” from “what this contract pays” every time.
An auto policy may also contain exclusions for racing, public or livery use, certain business uses, or vehicles furnished for regular use. Never import an exclusion that the question does not mention when the exam asks you to apply a clean set of facts. In a customer interaction, however, ask about rideshare, delivery, borrowed autos, household drivers, and regular use. A premium application and the policy’s defined terms can affect coverage.
After checking your answers, rewrite one item with a changed fact. Add a third injured person to test the accident cap. Change the damaged storefront to the insured’s own garage to test first-party versus third-party coverage. Change an admitted permissive driver to an unauthorized user to test the policy’s insured definition. Explain the changed outcome rather than memorizing a letter.
Common questions
Are these official Pearson questions?
No. These are original practice scenarios. Pearson publishes the exam outline and administers the exam, but it does not endorse these items or reveal its live questions. These stems are original and use simplified facts to teach limit application.
What does the 30/60/25 auto liability notation mean?
It commonly represents bodily injury limits per person, bodily injury limits per accident, and property damage limits per accident. Verify the current Texas minimum and the exact declarations; the numbers are not a combined single limit.
Does auto liability cover damage to the insured’s own car?
Generally no. Liability addresses covered legal responsibility to others. Damage to the insured’s own vehicle is analyzed under purchased collision or other-than-collision coverage and the policy terms. Review the declarations for the policy’s specific coverage and limit amounts.
Does the minimum Texas limit cap the injured person’s total damages?
No. It caps the insurer’s payment under the applicable policy limit. A legally responsible insured may remain exposed to damages above available coverage. Minimums are statutory amounts; the insured may purchase greater protection.