Texas Personal Lines Insurance Practice Exam

The correct coverage that applies to owned trailers being towed by an insured auto under a personal auto policy is property damage liability coverage.

Property damage liability coverage is designed to protect the insured in the event that they are responsible for damaging someone else’s property while operating their vehicle, which includes trailers that they own and are using. When an insured auto is towing a trailer, and an accident occurs causing damage to another's property, this coverage would come into play.

In contrast, comprehensive coverage primarily protects against non-collision related incidents, such as theft or damage from natural disasters. Collision coverage provides protection for damage to the insured vehicle resulting from a collision, but it doesn't extend to liability for property damage. Uninsured/underinsured motorist (UM) coverage protects the insured when the other driver doesn’t have sufficient insurance but does not apply to owned trailers. Therefore, property damage liability coverage is the most fitting option for owned trailers being towed by an insured auto, as it addresses the liability aspect associated with towing.