Question

Marc Rose has a PAP with coverage of $25,000/$50,000 for bodily injury liability, $25,000 for property damage liability, $3,000 for medical payments, and a $1,000 deductible for collision insurance. How much will his insurance cover in each of the following situations? Will he have any out-of-pocket costs? Round your answer to the whole dollar, if necessary. Leave no cells blank, be sure to enter "0" wherever required.

1. Marc loses control and skids on ice, running into a parked car and causing $3,460 damage to the unoccupied vehicle and $2,855 damage to his own car.

   Total paid by the insurance company	$
   Marc's out-of-pocket costs	$

2. Marc runs a stop sign and causes a serious auto accident, badly injuring two people. The injured parties win lawsuits against him for $35,000 each.

   Total paid by the insurance company	$
   Marc's out-of-pocket costs (for both victims)	$

3. Marc's 18-year old son borrows his car. He backs into a telephone pole and causes $425 damage to the car.

   Total paid by the insurance company	$
   Marc's out-of-pocket costs	$

Answer 1

Total property damage done = 3460+2855 = $6315

This will be covered under property damage liability insurance subject to a collision deductible of $500

Insurance will pay = $6315 $1000 = $5315

Out of pocket cost(6315-5315) = $1000

B

Coverage of $25000/$50000 in bodily injury liability means that insurance will pay $25000 per person and a total of 50000 per accident

In this case, the claims are of $35000 each which is a total of $70000

The accident pay only $50000

Out of pocket costs = $20000

C

A collision accident will have a deductible of 1000

Here the amount is less than $1000, so the insurance company pays nothing

Out of pocket costs = $425