Question

How Much of a Major Auto Accident Loss Will Be Covered? Ashley Diamond of Estes Park, Colorado, drives an eight-year-old Toyota valued at $9,900. She has a $70,000 personal automobile policy with $10,000 per-person medical payments coverage and both collision ($200 deductible) and comprehensive coverage. David Smith of Loveland, Colorado, drives a four-year-old Chevrolet Malibu valued at $9,300. He has a 25/50/15 family automobile policy with $18,000 in medical payments coverage and both collision ($100 deductible) and comprehensive insurance. Late one evening, while he was driving back from Rocky Mountain National Park, David's car crossed the centerline of the road, striking Ashley's car and forcing it into a ditch. David's car also left the road and did extensive damage to the front of a roadside store. The following table indicates the damages and their dollar amounts:

Item

Amount Bodily injuries suffered by Ashley $ 6,600

Bodily injuries suffered by Fran, a passenger in Ashley's car 28,517

Ashley's car 9,900

Bodily injuries suffered by David 2,500

Bodily injuries suffered by Cecilia, a passenger in David's car 12,855

David's car 9,300 Damage to the roadside store 14,011

Use the information to answer these questions. Round your answers to the nearest dollar.

How much will Ashley's policy pay Ashley?

$

How much will Ashley's policy pay Fran?

$

Will subrogation rights come into play? In what way? The input in the box below will not be graded, but may be reviewed and considered by your instructor.

How much will David's bodily injury liability protection pay?

$

How much will David's property damage liability protection pay?

$

To whom will David's property damage liability protection pay?

How much will David's medical protection pay?

$

To whom will David's medical protection pay?

How much reimbursement will David receive for his car?

$

How much will David be required to pay out of his own pocket?

$

Answer 1

Ans a)

Ashley Diamond has per person medical coverage of $10,000. Bodily injuries suffered by Ashley is of $6,600 and Bodily injuries suffered by Fran is of $28,517. Therefore, the insurance policy will pay $6,600 for Ashley's injuries.

Ans b)

The insurance policy will pay $10,000 for Fran's injuries because her insurance limit is $10,000 per person.

Ans c)

Subrogation rights allows an insurer to take action against the negligent third party to obtain reimbursement for payment made to an injured person. In the given case, David's car crossed the centerline of road and strike Ashley's car, David would be at fault. Hench Ashley's insurance would use subrogation rights to seek reimbursement from David and his insurance company for the loss of Ashley and Fran.

Ans d)

David has a bodily injury liability protection limit of $25,000 per person. Ashley's insurance will use subrogation rights to obtain reimbursements for $16,600 ($6,600 for Ashley and $10,000 for Fran). Since Fran bodily injuries exceeded Ashley's policy therefore David's bodily injury liability protection will also pay $15,000 apart from the above.

Total Liability protection will pay $31,600 ($6600+$10000+$15000)

Ans e)

David's property damage liability protection limit is $15,000 per accident. Therefore, David is liable for Damage of Ashley's car for $9,900 and of roadside store of $14,011. The total value of damage is $23,911. His property damage liability will pay $15,000 and balance will be paid by David himself.