Risk Management & Insurance - Auto Insurance chapter (22)

Automobile Insurance Application Question #1

Fred has a PAP with the following coverages:

Liability coverages: $100,000/$300,000/$50,000

Medical payments coverage: $5,000 per 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.

Letter	Loss Covered? Yes or No	Insureds Deductible Amount	Amount Payable by Insurer After Deductible	What Policy section?
EXample: Fred hits a parked car	YES	$250	$9,750	Uninsured Motorist
A: Freds son, age 16, is driving a family car, runs a red light, & kills a pedestrian. The family of the deceased pedestrian sues & 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 & negligently smashes into another motorist. The other drivers car, valued at $15,000, is totally destroyed. Repairs to the friends car are $5,000
C: Freds daughter, Heather, attends college in another state & drives a family auto. She lets her boyfriend drive the car, he negligently injures another motorist, and 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 & smashes into the foundation of a house. The property damage to the house is $30,000. The damage to the family car is $8,000. Freds wife has medical expenses of $5,000.
E: Fred is walking across a street & 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 & is sued for $50,000.
G: Freds car hits a cow crossing a highway. The cost of repairing the car is $2,500.
H: A thief breaks a car window & steals a camera & 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, the left rear fender has been damaged by another driver who did not leave a name. The cost of repairing the car is $2,000.
J: Fred works for a construction company & is driving a cement truck. He negligently injures another motorist who sues Fred for $25,000.
K: Freds son drives a family car on a date. He gets drunk, so his girlfriend drives him home. She 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.