Question

1. Gerry has a Personal Auto Policy (PAP) with Liability coverage limits of 25/50/10 and a $1,000 Medical Payments coverage limit. He collides with another car (he is at fault) and the following losses are incurred.

Bodily injury to the driver of the other car = $100,000.

Bodily injury to the passenger of the other car = $3,000.

Property damage to the other car = $11,000.

Bodily injury to Gerry's wife = $5,000.

a. How much will Part A (liability coverage) of the PAP pay, in total, for this accident?

b. How much will the (entire) PAP pay, in total, for this accident?

Answer 1

Liability auto insurance has two parts. The first is bodily injury and the second is property damage. Bodily injury pays for the medical expenses of those you harmed in an auto accident, up to your limits. Property damage covers the damage you caused to another vehicle or to other property, such as a fence, in an auto accident, again up to your limits. Liability coverage does NOT cover your injuries or your vehicle, only those outside your vehicle whom you caused damages to.

Here's how to read auto insurance liability minimum limits:

1. First number: Bodily injury liability maximum for one person injured in an accident.
2. Second number: Bodily injury liability maximum for all injuries in one accident.
3. Third number: Property damage liability maximum for one accident.

For example, the minimum liability limits are $25,000 for injury liability for one person, $50,000 for all injuries and $10,000 for property damage in an accident (written as 25/50/10).

a. How much will Part A (liability coverage) of the PAP pay, in total, for this accident?

In this example coverage is same as above example.

• Bodily injury to driver will be paid upto $25,000 which is highest limit for one person.
• Bodily injury to the passenger of the other car will be paid $3,000 as total for all injuries permitted upto $50,000.
• Property damage to the other car will be paid $10,000 as there is only coverage of that amount.

Total Amount will be paid $38,000.

b. How much will the (entire) PAP pay, in total, for this accident?

In additon to above $1,000 will be paid for Bodily injury to Gerry's wife.

Hence $39,000 will be paid under the entire PAP, in total, for this accident.