Alabama Property and Casualty Practice Exam

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What is the minimum liability limit required by the Motor Carrier Act of 1980 when transporting specified hazardous materials?

$1,000,000
$2,000,000
$5,000,000
$10,000,000

The correct answer is: $5,000,000

The minimum liability limit required by the Motor Carrier Act of 1980 for transporting specified hazardous materials is $5,000,000. This threshold reflects the need for a substantial level of insurance coverage to protect the public from the potential risks associated with the transportation of dangerous goods. Hazardous materials, such as chemicals, radioactive substances, or explosives, carry a higher level of risk during transit, which can lead to significant damages or injuries in case of an accident. Thus, the $5,000,000 limit was established to ensure that there are adequate financial resources available to cover any accidents, spillages, or other incidents that could occur. This significant coverage requirement is a part of the federal regulations aimed at enhancing safety standards in the transportation of hazardous materials. It underlines the importance of having properly insured carriers to mitigate the potential catastrophic impacts associated with such goods.