principle of risk management and insurance(Ch 20, 12ed)

1. Fred has a PAP with the following coverages: Liability coverages: $100,000/$300,000/$50,000 Medical payments coverage: $5000 each person Uninsured motorists coverage: $25,000 each person Collision loss: $250 deductible

Other-than-collision loss: $100 deductible

With respect to each of the following situations, indicate whether the loss is covered and the amount payable, if any, under the policy. Assume that each situation is a separate event.

a. Freds son, age 16, is driving a family car, runs a red light, and kills a pedestrian. The family of the

deceased pedestrian sues and damages are awarded in the amount of $500,000.

b. Fred borrows a friends car to go to the supermarket. He fails to stop at a red light and negligently smashes into another motorist. The other drivers car, valued at $15,000, is totally destroyed. In addition, repairs to the friends car are $5000.

c. Freds daughter, Heather, attends college in another state and drives a family auto. Heather lets her boyfriend drive the car, and he negligently injures another motorist. The boyfriend is sued for $50,000.

d. Freds wife is driving a family car in a snowstorm. She loses control of the car on an icy street and smashes into the foundation of a house. The prop- erty damage to the house is $30,000. The damage to the family car is $8000. Freds wife has medical expenses of $5000.

e. Fred is walking across a street and is struck by a motorist who fails to stop. He has bodily injuries in the amount of $15,000.

f. Freds car is being repaired for faulty brakes. While road testing the car, a mechanic injures another motorist and is sued for $50,000.

g. Freds car hits a cow crossing a highway. The cost of repairing the car is $2500.

h. A thief breaks a car window and steals a camera and golf clubs locked in the car. It will cost $400 to replace the damaged window. The stolen property is valued at $500.

i. Freds wife goes shopping at a supermarket. When she returns, she finds that the left rear fender has been damaged by another driver who did not leave a name. The cost of repairing the car is $2000.

j. Fred works for a construction company. While driving a large cement truck, he negligently injures another motorist. The injured motorist sues Fred for $25,000.

k. Freds son drives a family car on a date. He gets drunk, and his girlfriend drives him home. The girlfriend negligently injures another motorist, who has bodily injuries in the amount of $200,000.

l. Compact discs (CDs) valued at $500 are stolen from Freds car. The car was locked when the theft occurred.

m. While driving a rented golf cart, Fred accidentally injures another golfer with the cart.