Multirisk Management Contracts II: Auto

Chapter 14: Multirisk Management Contracts II: Auto 

6. Barney has a PAP with liability limits of 25/50/15 and collision coverage with a $200 deductible. While pulling his boat and trailer—which are not listed in the policy’s declarations—to the lake, he loses control, sideswipes the car he is passing with his trailer, and then rams a farmer’s tree with his car. The losses are as follows:

 
Using the PAP in Appendix B, explain what will and will not be paid by Barney’s insurance contract, and why.
 
Answer:
Barney’s limits are:
Bodily injury = ___________each person, _______________ each accident
Property damage = $______________ each accident
 
The definition of covered auto is important in this case. The trailer is covered for liability purposes but not for collision purposes because it is not shown in the declarations. The boat is not covered because it is not a “Covered Auto.”
Since no medical payments limit is indicated, we will assume the basic limit of $500 per person.
 
Barney (medical expenses):
Medical payments will pay _________ of his ___________ in medical expenses. Barney bears the remainder.
 
Barney’s girlfriend (medical expenses):
Medical payments will pay ___________with the remaining ______________ covered by the bodily injury liability.
 
Driver of other car:
Lost income: The lost income of ____________ is covered by Barney’s bodily injury liability.
Medical expenses: The lost income of _____________ is covered by Barney’s bodily injury liability.
Mental anguish: This is/is not covered by Barney’s PAP because it cannot be accurately measured. Barney may have to bear this expense if the court rules in favor of the plaintiff.
 
Passenger of other car:
The losses for the passengers of the other car are not covered by Barney’s PAP because they will be covered by the other person’s PAP. This is done to avoid double payment.
 
Barney’s car:
_______________minus _________deductible, that is, _____________ is paid by Barney’s collision coverage.
 
Barney’s boat:
Loss of _______ for Barney’s boat is/is not covered by collision coverage.
 
Barney’s trailer:
Loss of __________ for Barney’s trailer is/is not covered by collision coverage.
 
Farmer’s tree:
Loss of _______ is/is not covered by Barney’s property damage liability.
 
Other driver’s Mercedes:
Only ______________ out of ____________ is covered by Barney’s property damage liability. This is because Barney’s limit for property liability is _____________, which means that the insurer will only pay for losses for an amount of _____________. Barney may have to bear the remainder amount of $____________.