Question

17. Rick lends his car to Larry, who has a crash while driving the car. According to other insurance provision in auto insurance policies, how will Rick's and Larry's policies share losses of the crash? A. Rick's policy will be the primary policy that pays first until it exhausts its policy limit. Larry's policy will be the excess policy that pays the remaining amount up to its policy limit. B. Larry's policy will be the primary policy that pays first until it exhausts its policy limit. Rick's policy will be the excess policy that pays the remaining amount up to its policy limit. C. The two policies will share losses on a pro-rata basis. D. Rick's policy never has to pay because he is not driving the car at the time of the crash. their vacation home for $200,000.

Answer 1

Rick is the owner of the asset and holds the title and possession of the assets. The insurance policy taken by the owner of the asset will be primarily responsible to compensate for the loss incurred to the asset of the owner. If the loss is beyond the limit of his insurance policy then the remaining portion will be recovered from the driver insurance policy.

Answer: A