Question

David Salter has a PAP with coverage of $25,000/$50,000 for bodily injury liability, $25,000 for property damage liability, $2,000 for medical payments, and a $500 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.

David loses control and skids on ice, running into a parked car and causing $2,145 damage to the unoccupied vehicle and $3,015 damage to his own car.

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

David runs a stop sign and causes a serious auto accident, badly injuring two people. The injured parties win lawsuits against him for $27,000 each.

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

David's 18-year-old son borrows his car. He backs into a telephone pole and causes $250 damage to the car.

Total paid by the insurance company	$ ______
David's out-of-pocket costs	$ _______

Answer 1

A: The insurance company will pay: 2145+3015 – 500 (deductible)

= $4,660

David’s out of pocket expenses = $500

B: The insurance company will pay $25,000 per person and $50,000 (25000*2) in total.

David’s out of pocket expenses = 27,000-25,000 = $2,000 to each of the two injured person. Total = 2*2000 = $4,000

C: The insurance company will pay zero as damage of $250 is less than the deductible amount of $500.

David’s out of pocket expenses = $250