Question

Question 1: Alan has a PAP with the following coverages:

·        Liability coverages: $100,000/$300,000/$50,000

·        Medical payments coverage: $5,000 each person

·        Uninsured motorists coverage: $25,000 each person

·        Collision loss: $250 deductible

·        Other-than-collision loss: $100 deductible

With respect to each of the following situations, indicate whether the loss is covered and the amount payable, if any, under the policy. Assume that each situation is a separate event.

a.     Alan’s son, age 16, is driving a family car, runs a red light, and kills a pedestrian. The family of the deceased pedestrian sues and damages are awarded in the amount of $500,000.

b.     Alan borrows a friend’s car to go to the supermarket. He fails to stop at a red light and negligently smashes into another motorist. The other driver’s car, valued at $15,000, is totally destroyed. In addition, repairs to the friend’s car are $5,000.

c.     Alan’s daughter, Heather, attends college in another state and drives a family auto. Heather lets her boyfriend drive the car, and he negligently injures another motorist. The boyfriend is sued for $50,000.

d.     Alan’s wife is driving a family car in a snowstorm. She loses control of the car on an icy street and smashes into the foundation of a house. The property damage to the house is $30,000. The damage to the family car is $8,000. Alan’s wife has medical expenses of $5,000.

e.     Alan is walking across a street and is struck by a motorist who fails to stop. He has bodily injuries in the amount of $15,000.

f.       Alan’s car is being repaired for faulty brakes. While road testing the car, a mechanic injures another motorist and is sued for $50,000.

g.     Alan’s car hits a cow crossing a highway. The cost of repairing the car is $2,500.

h.     A thief breaks a car window and steals a camera and golf clubs locked in the car. It will cost $400 to replace the damaged window. The stolen property is valued at $500.

i.       Alan’s wife goes shopping at a supermarket. When she returns, she finds that the left rear fender has been damaged by another driver who did not leave a name. The cost of repairing the car is $2,000.

j.       Alan works for a construction company. While driving a large cement truck, he negligently injures another motorist. The injured motorist sues Alan for $25,000.

k.     Alan’s son drives a family car on a date. He gets drunk, so his girlfriend drives him home. The girlfriend negligently injures another motorist, who has bodily injuries in the amount of $200,000.

l.       Compact discs (CDs) valued at $500 are stolen from Alan’s car. The car was locked when the theft occurred.

While

Answer 1

Answer a:- Alan's son is insured under the policy. $100,000 would be the liability available

Answer b:- Since this is an unowned auto Alan's insurance will pay excess. It would pay all of the insurance if his friend did not have insurance. The other driver's car would come out of liability. For the friend's car it is a collision loss so they would pay the $5,000 – the collision deductible of $250

Answer c:- If he had permission then he is included under policy. Would be payed under the liability section. For this injury there was $100,000

Answer d:- The house is covered under liability, property damage. Damage to car is covered under collision [deductible of $250($8,000 – $250) so $7,750] Personal injury has $5,000 for each

Answer e:- For the hit-and-run he would get personal insurance. It could be under medical pay or uninsured motorist. Would use uninsured because it is higher

Answer f:- Not covered under Alan's policy because the mechanic is in the business of dealing cars which is excluded under this policy. Garage would probably have own policy for this

Answer g:- Other than collision loss when it comes to hitting animals so $2,500 – deductible of $100 = $2,400