Question

Jamie is the named insured under a PAP that provides coverage for bodily injury and property damage liability, medical payments, uninsured motorist coverage, collision, and other than collision. For each of the following situations, determine whether the claim is covered under the PAP.

Jamie loans his car to his friend Bob. Bob loans the car to his son Fred who runs a stop sign and causes $10,000 damage to Cindy's car.

Jamie drives over the border to Mexico and has a collision with another motorist's car.

Jamie is in an accident while test driving a car as a mechanic for her employer Mick’s Garage.

Jamie is drunk driving and has a collision with another motorist. The other motorist has $20,000 in medical bills and $15,000 of damage to her car.

Jamie is in an accident while transporting a passenger for a fee. The passenger has $5,000 in medical bills.

2. Assume that an insured causes an automobile accident that injures five people and damages one auto. Assume that each of the injured parties successfully sues for $15,000. The damaged auto was worth $20,000. How much would the insurer pay if

a) the insured carried 15/30/5 limits?

b) the insured carried 25/50/25 limits?

c) the insured carried 100/300/50 limits?

Answer 1

1) a) In the scenarion 1, PAP covers an insured car irrespective of the person driving if the driver has a valid license. So it will be covered under PAP

b) PAP has an out of state coverage and hence it would be included

c) In this situtaion if Jamies employement comes under employement act for domestic employees it would not be included under PAP as it would be guided by the employment act.

d) Drunk driving in PAP is considered as purposely trying to harm your vehicle and other persons and hence it wont be insured under PAP

e) Vehicle used for public conveyance such as taxi is considered as an exclusion and hence medical bills of the passenger wont be covered.

2) a) The insured carried 15/30/5 limits- so the insurer would pay maximum:

$15,000 for injury/death to one person
• $30,000 for injury/death to more than one person
• $5,000 for damage to property ( in a single accident)

so the insurer would pay only $30K inclusive all the persons & $5K for the damaged auto.

b) for the limits 25/50/25 limits:

$25,000 for injury/death to one person
• $50,000 for injury/death to more than one person
• $25,000 for damage to property ( in a single accident)

so the insurer would pay $50,000 for the accident for the bodily damages and full $20,000 for the damage of auto

c) for the limits 100/300/50 limits,

$100,000 for injury/death to one person
• $300,000 for injury/death to more than one person
• $50,000 for damage to property ( in a single accident)

So the insurer would pay full $75000 to all the injured five people and also pay full $20,000 for the damaged auto