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Principles of Risk Management and Insurance, 13th Edition by Michael McNamara, George E. Rejda

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Application Questions

  1. Alan has a PAP with the following coverages:

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

    • Medical payments coverage: $5,000 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.

    1. Alan’s 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.

    2. Alan borrows a friend’s car to go to the supermarket. He fails to stop at a red light and negligently ...

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