FIN320

While you are driving your car in Mexico, 10 0 miles from the U. S. border, you run into a parked car and are injured. It costs $2,500 to repair your car and $1,500 to repair the car you hit. You incur $500 in medical bills as a result of this accident. Your auto policy will pay

Nothing. The geographic limit is 50 miles from the US-Mexican border.

Sulu purchased his first ever car on September 19 right after Finance 230. Before he can leave the lot, the salesperson requires that he show "proof of insurance." Suluhad been listening to Prof. Davis and called "his new insurance agent" that he had chosen before making the deal on the car. The agent gives him a verbal binder to Sulu and the car dealer and Sulu drives away happily to pay the premium to his new insurance agent. Five days later, the insurer issues Sulu's automobile policy. Which date in September will be the effective date of Sulu's new policy?

September 20. The insurance starts when bound by the agent (verbal is acceptable), not when the company operations finally issues the paperwork, but since policies start and stop at 12:01am, the policy would have the date and time of the NEXT 12:01am. If the effective date was made the SAME date as the purchase, then insurance would be provided before the binding of the coverage by the agent (back to the PREVIOUS 12:01am) and there is a moral hazard to the insurer by persons purchasing insurance AFTER the loss and getting policy coverage for the loss

All of the following are correct statements about aleatory contracts, except which one? If you paid the premium to your agent, but your agent does not turn it over to the insurance company, then the contract between you and the insurer is still valid. If there is a loss, the insured may collect more than the amount of the premium. This is a contract in which the consideration between the parties is not equal. Aleatory insurance contracts do not create hazard risk. Aleatory contracts tend to not be commutative between the contract's parties.

a

Automobile collision insurance covers damage to: A. the insured's auto regardless of liability. B. the insured's auto and another auto with which it collides. C. another auto the insured runs into if the insured is not liable. D. another auto the insured runs into if the insured is liable. E. more than one of the above.

a

Coverage G insures damage to A. an insured's automobile regardless of liability. B. the insured's auto and another auto with which the insured collides. C. another auto the insured collides with if the insu red is not liable. D. another auto the insured collides with if the insured is liable. E. none of the above

a

From the insured's perspective, not owning or riding in an automobile is an example of which type of risk mitigation? Avoidance. Hazard risk. Retention. Loss prevention. Transfer. Combination. Pure risk.

a

In purchasing automobile insurance, which of the following coverages should be considered essential? A. liability coverage. B. medical payments coverage. C. uninsured motorist coverage. D. underinsured motorist coverage. E. they are all essential

a

In the event of a total loss to property insured under a valued policy, payment will generally be made for the face amount of the policy. replacement cost. actual cash value. the cost to repair or replace the property. none of the above.

a

Purposely leaving your old bicycle unlocked for thieves in order to collect insurance money for a new bicycle is a ________, while accidentally running into a bus while you were setting up a playlist on your mobile phone is a ___________ moral hazard, morale hazard. morale hazard, moral hazard. moral hazard, societal hazard. societal hazard, moral hazard. societal hazard, physical hazard. societal hazard, morale hazard

a

The doctrine of contributory negligence has been replaced in many jurisdictions by the doctrine of comparative negligence. is a defense that benefits the injured party. is currently applied only in the field of employers liability. applies only in the case of automobile accidents. none of the above

a

The step in the risk management process that is most likely to be overlooked is determination of objectives. risk identification. evaluating risks. selection of the risk treatment device. evaluation and review.

a

The type of insurance company in which insureds are also insurers, and in which the members of the group assume liability for losses individually rather than collectively is a reciprocal. a pure assessment mutual. any mutual insurer. Lloyd's of London. none of the above.

a

Under the doctrine of stare decisis, Correct the courts will generally follow precedents from other courts when they are available. the court must decide each individual case on its merits. the decisions of other courts have less influence. a court must follow precedent if one is available. None of the above.

a

Which of the following would result in the largest increase in automobile premium? A. conviction for drunken driving or driving under the influence of drugs. B. being licensed for less than two years. C. several minor traffic violations within a five year period. D. an accident at which the insured was at fault. E. making a claim for vandalism of your car while parked overnight at your apartment

a

Which section of an insurance policy is unique to each individual insured? Declarations. Definitions. Insuring clause. Coverages. Conditions.

a

Your neighbor, who has his own insurance policy with Allstate with the same coverages you have with your State Farm Policy, borrows your car and runs into a tree, causing $2500 in damage to your car. Which of the following provisions keeps you from collecting for this loss under both your policy and your neighbor's insurance? a. Other insurance provisions b. Lack of insurable interest c. Subrogation d. Estoppel e. Consideration

a

An Insurance agent's authority to act on behalf of an insurer is limited to the express authority expressly granted in an agency contract. may include authority that is not expressly granted by contract. is limited by the doctrine of implied agency restrictions. includes stipulated authority and implied authority, but not ostensible authority. None of the above.

b

Automobile JUAs A. are sometimes referred to as "no-fault" insurance plans. B. are designed to provide auto insurance to persons who cannot obtain it through private automobile insurers. C. reduce the cost of automobile insurance for drivers not in the "association." D. provide government subsidized auto insurance to some drivers. E. will provide auto insurance to anyone who wants to pay the premium

b

By definition, estoppel: is the failure to disclose known facts. prevents one from denying a fact if the fact was admitted to be true by previous actions. allows the insurer to deny liability on the basis of the insured's previous actions. is the intentional abandonment of a known right. none of the above.

b

For the insurance company, a meaningful measure of risk is: the probability that an individual loss will or will not occur. the possible deviation of actual from predicted results. the size of the population insured. the relationship of premium to average loss. None of the above.

b

If an agent tells an insured that a breach of a policy condition will not affect the policy's coverages, and a loss occurs, the insurer may: deny coverage if the breach contributed to the loss. be liable for the loss because the agent's acts are considered acts of the insurer. deny liability if the agent was not authorized to make such statements. deny liability because a waiver must be in writing before it is valid. None of the above.

b

In the question of a property owner's responsibility toward persons who come onto his or her property, the highest degree of care is owed to a licensee. some courts have eliminated the distinction among trespasser, licensee, and invitee. all jurisdictions consider a social guest to be an invitee. common law makes the obligation of the property owner toward trespassers and licensees the same as to invitees. none of the above.

b

Many people intending to get married will sign a contract called a "prenuptial agreement" before their marriage to state the provisions for division of property and spousal support in the event of divorce or breakup of that marriage. A prenuptial agreement is which kind of risk management technique? Avoidance Loss control Loss prevention Retention Risk transfer All of the above

b

One reason that regulation of insurance is considered necessary is the fact that there is a lack of competition within the industry. the consumer cannot always evaluate the product. there are not enough insurance companies. many insurance executives and agents are dishonest. the natural tendency of the industry is toward collusion.

b

State legislatures enacted compulsory automobile insurance liability laws primarily A. to make sure that drivers are protected against liability they may incur. B. to provide claimants with a defendant worth suing. C. in an effort to help consumers make good risk management decisions. D. to generate premium tax dollars. E. more than one of the above

b

The type of insurance that is characterized by individual equity and contractual arrangements is generally referred to as: social insurance. private insurance. property-liability insurance. public guarantee insurance programs. government insurance programs. individual life insurance. public welfare insurance. None of the above.

b

To be technically correct, we should define "weather" as: a peril. a hazard. a risk. a loss. it depends on the insurance division defining "weather." Any of the above is equally correct.

b

Under the State Farm PAP, if the insured has an auto without collision, an additionally acquired auto a. is not covered for collision until it is reported to the insurer b. is covered for collision for 5 days after delivery with a $500 deductible c. is covered for collision for 30 days d. is automatically covered e. is not covered for collision until the end of the policy period

b

Waiver is the same thing as estoppel. involves the relinquishment of a known right. is an obsolete doctrine, seldom used in insurance today. is an exception to the principle of indemnity. none of the above.

b

When one person borrows another's automobile A. the insurance of the operator is primary. B. the insurance on the car being driven is primary. C. the insurance on both cars applies on a pro-rata basis. D. coverage applies on a "contribution by equal shares" basis. E. none of the above.

b

Which of the following is correct for the relationship between deductible and premium? A. There is a positive correlation between deductible and premium. B. There is an inverse correlation between deductible and premium. C. There is no correlation between deductible and premium. D. The correlation between deductible and premium cannot be determined

b

Which of the following is not a requirement of a legally binding contract? offer and acceptance. written. legal object. consideration. competent parties.

b

Which of the following is true of brokers and agents? brokers are compensated by their clients on a fee basis, while agents receive a commission from the company. brokers do not work for the insurer, and therefore cannot bind the company. brokers operate primarily in the life insurance field, while agents operate in both the life insurance field and the property and liability field. agents may bind a company orally, while brokers have the authority to bind only in writing. none of the above.

b

Which of the following statements about risk management is correct? risk management is simply another term for corporate insurance buying. risk management has relevance for organizations of all sizes. risk management has an anti-insurance bias and seeks to minimize the use of insurance in dealing with risk. risk management is concerned primarily with the risk problems of giant corporations. risk management is a function of business and as such has little relevance for the individual.

b

Adverse selection is a term used to describe: the choice of the wrong insurance to fit a specific need. an underwriting error on the part of an insurance company. the tendency of the poorer than average risks to seek insurance to a greater extent than do the better than average risks. a loss situation in which the chance of loss cannot be determined. None of the above.

c

All of the following statements are true with respect to liability insurance except a. it is commonly referred to as third party coverage. b. the insurer is obligated to pay damages only when the insured is legally liable. c. the injured party has a direct claim against the insurance company. d. the insurer promises to defend any suits involving the type of liability insured. e. none of the above.

c

Assuming the same coverage, type of automobile, territory, and driving record, which of the following persons would you expect to pay the highest premium for automobile insurance? A. a 35-year old single female. B. a 20-year old married male. C. a 20-year old single male. D. a 20-year old single female. E. a 35-yer old single male

c

Because of the fact that the terms of an insurance contract are fixed by the insurer instead of being determined by a bargaining process, the insurance policy is said to be a contract of utmost good faith. an aleatory contract. a contract of adhesion. a contract of indemnity. a voided contract. an insurance policy contract.

c

In most states, Uninsured Motorists Coverage provides coverage A. for all damages caused by an Uninsured Motorist. B. only property damage caused by an Uninsured Motorist. C.for bodily injury caused by an Uninsured Motorist. D.which is automatically included under Medical Payments coverage. E.none of the above

c

Insurance which is required by law: is classified as a social insurance coverage. is classified as a compulsory-private insurance coverage. may be social or private, depending on other characteristics. is usually classified as a public guarantee program. None of the above.

c

Kelsey is a huge football fan and never misses an I llini football game. On her way to the Illini game at Soldier Field in Chicago, she has an accident and her car is undrivable; the driver's side door will not shut. Thankfully, nobody is hurt. She exchanges information with the other driver, but when she calls for the tow truck, they tell her it will be three to four hours before they can get there due to the football traffic. Upset at the tow company, she leaves her car by the side of the road and walks to Memorial Stadium. When she gets back to her car after the game, it has been vandalized almost beyond recognition including near total destruction to the interior of her car. The door costs $2,200 to repair and the interior $12,100. The insurance company will pay for the door, but refuses to pay for the damage to the interior of her car based on which part of the auto policy? A. Insuring Agreement B. Endorsement C. Conditions and Duties D. Declarations E. Exclusions

c

One evening after a football win, you drink way too much beer. In your drunken stupor you make an after-midnight deal and you sign a contract. The next day you realize what an idiot you were and you need to get out of the contract. Which requirement of a valid contract would allow this? Offer and acceptance. Consideration. Competent parties. Legal purpose. None of the above.

c

Our guest speaker, David Podwojski from State Farm said in class on Oct. 7 that Opportunity Pricing (OP): a. is used by all insurance companies in ratemaking. b. has the potential of bankrupting insurers because of loss expense allocation. c. is already banned in 18 states and the District of Columbia. d. is a new concept to marketing and sales.

c

The NAIC risk-based capital (RBC) standards are designed to replace statutory capital and surplus requirements. are essentially identical for life insurance and property and liability insurers. judge the adequacy of an insurer's capital based on the specific risks facing that insurer. provide a basis for determining when additional scrutiny or an insurer is required, but do not indicate if regulatory intervention is required. all of the above.

c

The main objective of insurance companies must be increased industry regulation. employee education. profit. efficiency. market reputation

c

The most favorable doctrine from the perspective of a least-at-fault injured person is contributory negligence. last clear chance. comparative negligence. the principles of common law. concurrent negligence.

c

The possibility of loss resulting from a home fire is an example of: a static fundamental risk. a dynamic fundamental risk. a static particular risk. a dynamic particular risk. a static dynamic risk. a fundamental particular risk

c

Which of the following is not required for an ideal insurable risk? Large Number of Similar Exposure Units. Calculable expected average loss. Ability of the insured to accept a high deductible. Definite time and place of insurable event. Measurable economic losses. Stochastic and serendipitous losses.

c

Which of the following opposes a shift to a system of federal regulation for insurance include The U.S. Department of Justice. banks and certain large insurance companies. advocates of states' rights. the American Council of Life Insurers. all of the above oppose a shift to a system of federal regulation.

c

Which of the following represents an exception to the principle of indemnity? Actual cash value payment of insurance losses. The doctrine of insurable interest. Replacement cost coverage. Subrogation. Other insurance provisions.

c

Which of the following would be an example of "loss prevention"? Purchasing a less expensive car. Switching insurance from one company to another. Installing a home security system with a sign in the front yard. Chasing the robber down the street after being robbed. Purchasing Burglary & Robbery Insurance after being robbed

c

Which part of the insurance contract is the statement on page 4 that states, "Resident Relative means a person, other than you, who resides primarily with the first person shown as a named insured on the Declaration Page..." : a. Application b. Declarations c. Definitions d. Insuring clause e. Conditions f. Exclusions and exceptions

c

Your neighbor has his own insurance policy with Allstate with the same coverages that you have with your State Farm Car Policy. So when he tells you that his insurance will cover an accident in your car, you lend him yo ur car. He promptly runs into a tree, causing $2,500 in damage to your car. How much will your insurance policy pay? A.$ 0 -Allstate will pay for the damage B.$ 0 -Neither company is responsible for the damage C.$ 2,000 D.$ 2,500 E.Cannot be determined

c

A drunken driver killed a man and severely injured his wife. The court awarded the wife $10 million in damages. A substantial part of the damages were undoubtedly loss of consortium damages. special damages. general damages. punitive damages. intangible damages.

d

An individual who had a chance and failed to avoid an accident would likely be liable under the doctrine of respondeat superior. res ipsa loquitur. negligence per se. last clear chance. contributory negligence

d

In most states, Underinsured Motorists coverage A. essentially duplicates Uninsured Motorists coverage. B. is a statutory coverage required of all drivers. C. is usually written with limits equal to the state's minimum financial responsibility D. is mutually exclusive with Uninsured Motorists coverage. E. none of the above

d

Most states currently have A. compulsory auto insurance laws, but not financial responsibility laws. B. financial responsibility laws, but not compulsory auto insurance laws. C. no-fault laws. D. compulsory auto insurance laws and financial responsibility laws. E. no-fault laws and compulsory auto insurance laws.

d

One way the principle of indemnity is enforced is: through valued policy laws. to a greater extent in life insurance than in the field of property insurance. to the same extent in all fields of insurance. through the principle of subrogation. None of the above.

d

Risk avoidance would be the best solution in all of the following instances except which one? No other alternative is available. The risk cannot be transferred. When the frequency and severity of loss are high. When the probability or frequency cannot be determined. When premiums are excessively expensive.

d

The State Farm Car Policy liability coverage can be best classified as which of the following: a. Commercial, life-health, private, voluntary b. Personal, property-liability, government, voluntary c. Personal, property-liability, government, involuntary d. Personal, property-liability, private, involuntary e. Personal, property-liability, private, voluntary

d

The combined ratio of an insurance company is: a combination of the expense ratio and underwriting loss used for claim adjusting the loss ratio and return on equity a measure of underwriting profit or loss a determinant for ratemaking used by actuaries

d

The definition of "uninsured motor vehicle " under the Uninsured Motor Vehicle coverage of the Personal Auto Policy includes A.an automobile being operated without liability insurance. B. a hit-and-run driver. C. an automobile insured by a company that becomes insolvent. D. all of the above. E. none of the above.

d

The distribution system which places great emphasis on the "ownership of renewals" is referred to as the brokerage system. the direct writing system. the captive agent system. the independent agency system. none of the above.

d

The principle of indemnity requires that: insurance rates must be neither too high nor too low. the insured should be made whole for all types of losses suffered. insureds who have claims must pay part of the losses that result. insureds are fully compensated for economic losses suffered. the insured must be paid the benefits that his or her premium has purchased. None of the above.

d

The term "risk" is best defined as: the same thing as the term "peril." a condition that increases the chance of loss. as a hazard. uncertainty regarding future losses. the same thing as probability of loss.

d

Which of the following losses would be paid under the collision coverage of the Personal Auto Policy? A. the car is stolen and the thief collides with a bridge. B. the car collides with a deer. C. bricks fall from a truck the insured is following and hit the car. D. the insured misjudges a curve and "rolls" the car. E. none of the above.

d

Which part of the insurance contract is the statement, "Resident Relative means a person, other than you, who resides primarily with the first person shown as a named insured on the Declarations Page and who is:..."? A. Application B. Declarations C. Insuring Agreement D. Definitions E. Conditions F. Exclusions and exceptions

d

Which would be an example of a transfer of risk by "contractual arrangement"? Paying your electric bill with cash. Selling stock in your new business. Replacing the bald tires on your automobile. The one-year warranty on your i>clicker. Your company decides not to produce a dangerous product

d

You sell your car to a woman who responds to an ad you placed online, but you mistakenly pay the insurance renewal premium on the car after you sell it. During the policy term you find out that the woman you sold the car to was in an accident that caused extensive damage to the car. Which of the following is true? You can collect for damages done to the car since you had an insurable interest at the inception of the policy. You cannot collect on the losses to the car, because you were not in the accident. You can collect under your policy, but you must turn the payment over to the women who bought the car. You cannot collect for the loss to the car since you did not have an insurable interest in the car at the time of loss. It is your option to decide if you want to collect for the loss to the car and make payment to the woman to whom you sold the car.

d

Advocates of the "no-fault" approach to compensating auto accident victims argue that such a plan would A. speed the compensation of injured persons. B. reduce litigation and help to clear the congested courts. C. result in more equitable compensation to injured persons. D. reduce the cost of compensating those who are injured. E. all of the above.

e

Because of the fact that the terms of an insurance contract are fixed by the insurer instead of being determined by a bargaining process, the insurance policy is said to be a contract of utmost good faith. an aleatory contract. a contract of indemnity. a unilateral contract. a contract of adhesion.

e

Insurance policies contain exclusions because: some perils are uninsurable. some types of property must be covered under special policies. some coverages are subject to separate rating. some perils are covered under other policies. All of the above.

e

Involuntary retention occurs when: the risk is not recognized. insurance coverage is not available. insurance does not cover the intended exposure. loss control measures are improperly implemented. All of the above.

e

On page 35 of the State Farm Car Policy, the policy states, "The insured must give us or one of our agents written notice of the accident or loss as soon as reasonably possible." Which part of the contract is this statement? A. Application B. Declarations C. Insuring Agreement D. Definitions E. Conditions F. Exclusions and exceptions

e

The combination of a large number of exposure units by an insurer is important for the operation of insurance because: it reduces uncertainty in the aggregate. it allows the insurer to make accurate predictions. it spreads losses among the members of the group. it makes the insurer's aggregate risk less than a summation of the risks of the individuals. All of the above.

e

The underwriting process is designed to: Collect relevant applicant information Protect company profits Adhere to legal requirements Determine policy form and riders for individual applicants All of the above

e

The willingness to pay a premium for car insurance that is higher than your expected losses represents: speculative risk. expected loss. risk neutrality. risk seeking. risk aversion.

e

To which of the following persons does the medical payments coverage of the Personal Auto Policy not apply? A. the' named insured' while occupying a non-owned automobile. B.'nonresidents' while occupying the owned automobile. C.'non-insured persons' struck by the owned automobile. D.'resident relatives' struck by an automobile while pedestrians. E.'persons' occupying (riding) an AMTRAK train

e

Which of the following is not true with respect to the property and liability insurance industry? there are few barriers to entry by new competitors. competition has produced changes in market share of competitors over time. the field is highly decentralized, with no firm controlling as much as 10% of the market. the business is highly cyclical. profits have consistently been above those in other industries.

e

Which of the following losses would be payable under the comprehensive coverage of the Personal Auto Policy? A. flood damage. B. damage to the car from hitting a bull on the highway. C. glass broken in a collision. D. damage caused by hail. E. all of the above.

e

Which of the following situations would the Automobile Policy not provide coverage under the liability section? A. The named insured rents a motorhome for a vacation. B. A resident relative borrows a pick-up truck for pleasure use. C. A non-resident borrows the insured's covered auto f or business use. D.The spouse of the named insured rents an auto while at a business conference. E.The named insured borrows a truck for moving furniture for their small business. F. anyone operating the owned automobile listed on the declarations page with the owner's permission. G. the employer of the named insured is sued because of the operation of the covered auto during the course of employment.

e

Which of the following types of insurance is a "Personal-Involuntary-Private-Property & Liability" type of policy? Health Maintenance Organization (an HMO policy) Disability Income Protection (DI) Social Security (OASDI) Business Owners Policy (BOP) Personal Auto Policy (PAP) Homeowners Insurance (HO)

e

Corporations have been implementing Enterprise Risk Management at a more rapid pace in the last decade because of which of the following trends and changes? Increased Federal regulation regarding public statements by corporate executives. Increased volatility in the markets. Internatonal competition. Increased speed of financial transactions. Larger variablility in value of assets. All of the above. None of the above.

f

John Jones is insured with State Farm. His son Junior, who lives with him, has his own policy with Geico. John is using his son's auto while his own car is in the garage for repairs. In case of accident, A. There will be no coverage under either auto policy. B. Only the Geico policy would apply. C. Both policies will apply on a pro-rata basis. D. Only the State Farm policy would apply. E. The State Farm policy will be primary, with the Geico policy applying on an excess basis. F. The Geico policy will be primary, with the State Farm policy applying on an excess basis. G. It cannot be determined from the information given.

f

The elements of an ideal insurable risk: require that the probability of a given loss be known. include the requirement of loss payments. must be advantageous to the insured. requires multiple types of units to be pooled. must be present or the exposure cannot be insured. are desirable, but some insurable risks do not possess them. More than one of the above.

f

Under most financial responsibility laws, an individual prove financial responsibility A. in order to obtain a driver's license. B. at the time of an accident in which he or she was at fault. C. in order to register an automobile. D. when he or she is held legally liable for an auto accident. E. regardless of liability when involved in an accident in which there is bodily injury or property damage in excess of some specified amount. F. all of the above

f

Your next door neighbor's 12-year-old son is getting out of your minivan when he slips, falls to the curb and breaks his leg. He incurs $3,500 in medical bills. How much will your policy pay?

$3500 will be paid under Medical Payments to "...other person[s] while occupying your car" (pg.9) using the definition of "occupying" (pg. 4).

For a first-time 16-year-old driver there is a 30% chance that he will get in a major accident resulting in a loss of $5,000 and a 20% chance that he will get in a small fender bender resulting in a loss of $500. The other expected outcome is no accident whatsoever. What is his total expected loss?

($5000 X .30) + ($500 X .20) + ($0 X .50) = $1,600

You borrow your neighbor's car. Your neighbor has insurance coverage with GEICO with liability coverage of 25/50/25, equal limits for uninsured/underinsured motorist coverage, and a $500 collision deductible. You lose control of the car and run into a tree. You are okay, but it costs $14,000 to repair your neighbor's car. The ACV of the car is $12,000. How much will your policy pay?

0

Your car is stolen. You immediately report the loss to the insurance company. You rent a car that costs $22 per day. Your car is never recovered. State Farm offers to pay you for the loss 16 days after it was stolen. The ACV of your car was $12,000. How much will your auto policy pay?

11,256

You are a member of the U of I frisbee golf club and are driving to Columbus for a game against their club team when your car engine catches fire. You suffer serious burns and are hospitalized for 30 days. You are billed $500 per day hospital room and board, $15,000 for laboratory tests, $10,000 for surgery, and $8,000 for surgical dressings. Your car would cost $10,000 to repair; its ACV was $8,000 at the time of the loss. To make it worse, in your absence, your team loses every game it plays. How much will your policy pay?

12,500

While you are driving your car in Urbana, you lose control and run into a house, injuring four people inside the house. They all sue you and win the following bodily injury awards: first person $60,000, second person $20,000, and the third person $10,000. It costs $65,000 to repair the house and $5,500 to repair your car. How much will your policy pay?

135,000

You are driving your car bet ween Champaign and Chicago when you run into the back of a bus, causing it to leave the road and land in a ditch. Ten people on the bus are injured, and each wins a bodily injury award against you for $20,000. It costs $ 60,000 to repair the bus and $6,5 00 to repair your car. Your auto policy will pay:

156000 100,000 + 50,000 + (6,500-500) = 156000 The bodily injury liability limit for a single accident is $100,000; the limit for property damage is $50,000; your collision has a $500 deductible

Your father, who does not live with you and has Nationwide auto insurance, borrows your car. While driving your car, he is hit from behind by an uninsured driver and injured. He incurs $ 6,000 in medical bills and would be entitled to a $ 12,000 bodily injury award if the other driver had been insured. Your car costs $4,500 to fix. How much will your auto policy pay?

16,000

While you are driving your car in Mexico, 25 miles from the U. S. border, you run into a parked car and are injured. It costs $1,800 to repair your car and $1,200 to repair the car you hit. You incur $500 in medical bills as a result of this accident. How much will your policy pay?

3,000

Your 22 year old son John, who is a legal resident but is attending college away from home, borrows his best friend's car for an errand. John goes to his friend's house and borrows this car about once a week. His best friend has a policy with The General Insurance Co. that includes liability with 20/40/15 limits, and uninsured and underinsured motor vehicle coverage, both with 20/40 limits, but no medical payments or physical damage coverage. While driving his best friend's car, John is hit from behind by an uninsured driver. John incurs $27,000 in medical bills and would be entitled to a $58,000 bodily injury award if the other driver had been insured. Also, the friend's car incurs damages that cost $7,400 to repair. How much will your policy pay?

30,000

Your 62-year-old mother, who lives with you, is getting out of your car one day when she trips over the curb and breaks her ankle. Including the emergency room visit and the stay in the hospital for several days, she incurs $4,000 in medical bills. How much will your auto policy pay?

4,000

You are driving a friend, along with some of his belongings, back to campus from Chicago on Labor Day weekend, when you hit a bridge abutment on I-57. Your friend is injured and his belongings are damaged. He incurs $500 in medical bills. He sues you (so much for the friendship) and wins a bodily injury award of $3,000 and a property damage award for $1,000. It costs $1,500 to repair your car. How much will your policy pay?

5,000

You decide that you would like a new car, so on your birthday you go buy a new Lamborghini for $250,000 (less the generous trade-in of $5,000 you get in trade for your Mercury). In all the excitement, you forget to tell State Farm about this new car. Four days later, at 3 am when the Edens Expressway in Chicago is clear of traffic, you decide to see just how fast it can go. You learn that it can go faster than you can control it, and you run into a concrete bridge support. You call for a tow truck to take it to a nearby repair shop. It costs $100 for the tow and $75,000 to repair the car. How much will your auto policy pay?

74,600

You are walking through a parking lot when you are hit by a car and seriously injured. The driver only carries 20/40/15 liability coverage. You incur $20,000 in medical bills that are paid by State Farm under Coverage C. After arbitration with State Farm, it is decided you should be entitled to a bodily injury award of $45,000. How much will your policy pay?

Bodily injury awards include medical payments therefore the total payment is $45,000; since $20,000 is already paid by the other insurer, your insurer pays $25,000. 45000 -20000 = 25000