Principles of Risk Management and Insurance, 13th Edition

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 ...