auto insurance calculations:\n\nbob was in an auto accident caused by his negligence. he has 100/300 bodily…
auto insurance calculations:\n\nbob was in an auto accident caused by his negligence. he has 100/300 bodily injury insurance. the three people injured in the accident sued. one person was awarded $140,000, and each of the other two was awarded $75,000. how much does the insurance company pay?
Answer
Explanation:
Step1: Identify policy limits
The policy is $100/300$, meaning $$100,000$ max per person and $$300,000$ max per accident.
Step2: Calculate payment for the first person
The award is $$140,000$, but the per-person limit is $$100,000$. $$P_1 = \min($140,000, $100,000) = $100,000$$
Step3: Calculate payment for the second person
The award is $$75,000$, which is under the per-person limit. $$P_2 = \min($75,000, $100,000) = $75,000$$
Step4: Calculate payment for the third person
The award is $$75,000$, which is under the per-person limit. $$P_3 = \min($75,000, $100,000) = $75,000$$
Step5: Sum individual payments and check accident limit
Total individual payments are compared against the $$300,000$ accident limit. $$\text{Total} = $100,000 + $75,000 + $75,000 = $250,000$$ Since $$250,000 \le $300,000$, the company pays the full sum.
Answer:
$250,000