brahim purchased Personal Auto Policy with liability limits of 100/250/50. Ibrahim ran a red light and...

brahim purchased Personal Auto Policy with liability limits of 100/250/50. Ibrahim ran a red light and colluded with another vehicle. The other vehicle sustained $60,000 in property damages. The following bodily injuries were suffered by passengers in the other vehicle: Passenger A, $50,000; Passenger B, $120,000; and Passenger C, $70,000. Ibrahim sustained $15,000 in medical expenses, and Ibrahim’s car sustained $20,000 in damages. How much will Ibrahim’s insurer pay under Part A: Liability Coverage? Select one: a. $300,000 b. $280,000 c. $270,000 d. $325,000

Expert Solution

The answer is (c) $270000

Liability Coverage

Limits for Ibrahim's Personal Auto Policy is 100/250/50.Liability Coverage shall not bear or include Ibrahim's self property or medical expenses.

The limit of 100/250/50 indicates the following-

1. $100000 is the per person limit , that is maximum payout for each individual who is injured in accident caused by Ibrahim.

2. $250000 is total amount insurer shall pay for entire medical expenses of people injured by Ibrahim in a single accident.Its a cap limit set in case multiple people are injured.

3. $50000 is the maximum amount the insurer shall pay for damage caused to other persons property.

Now,

Actual Property Damage is $60000, but allowed limit is $50000.Thus, Insurer shall pay only $50000.

Individual Bodily Injuries of people in other vehical are-

Person	Amount of Bodily Injuries	Allowed Limit as per policy	Approved Amount
A	$50000	$100000	$50000
B	$120000	$100000	$100000
C	$70000	$100000	$70000

Total amount that insurer shall bear for per person injury = $50000+ $100000+ $70000 = $220000

Total expenses are under the cap limit of $250000

Thus,

Total amount borne by the Insurer of Ibrahim is = $50000 + $ 220000 = $270000

jeff jeffy answered 1 year ago

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