Hawaii Insurance License Practice Exam

The ratio of 20/40/10 in the context of insurance coverage specifically refers to the limits of liability coverage provided by an auto insurance policy. In this case, the components of the ratio are defined as follows:

- The first number, 20, represents the maximum amount of bodily injury liability coverage available per person injured in an accident. This means that if one individual suffers injuries in an accident for which the insured is held responsible, the insurer will pay up to $20,000 for that person's medical expenses and related costs.

- The second number, 40, indicates the total maximum amount of bodily injury liability coverage applicable for all individuals injured in a single accident. Thus, in a scenario where multiple people are hurt, the maximum payout for all injured parties collectively cannot exceed $40,000.

- The third number, 10, signifies the maximum amount of property damage liability coverage. In the event that the insured is liable for damaging someone else's property (such as a vehicle or fence), the insurance will cover up to $10,000 for those damages.

This structured format is standard in auto insurance policies, providing clear limits to both bodily injury and property damage coverage. Understanding these numbers is crucial for policyholders to gauge their financial exposure