Lori has a personal umbrella policy with a $1 million limit. The self-insured retention is $250. Lori has a homeowner’s policy with no special endorsements and an auto insurance policy. The policies have the following liability limits:
Homeowners policy: $300,000
Personal auto policy: $250,000/$500,000/$50,000
The liability limits meet the umbrella insurer's requirements with respect to the minimum amounts of liability insurance on the underlying contracts.
Indicate the amount, if any that would be paid by Lori's umbrella policy for each of the following losses.
a. Lori's dog bites a small child. The parents sue Lori and are awarded damages of $25,000.
b. Lori failed to stop at a red light, and her car hit a school bus. Two children are severely injured. A court awards each child damages in the amount of $350,000.
c. Lori is a volunteer for a local nonprofit charity. While being interviewed on television with other guests, Lori calls one of the guests a "bag lady." The guest sues Lori for defamation of character and is awarded damages of $25,000.
d. Lori is a member of the board of directors for a local bank. She receives an annual fee of $50,000 for her service as a board member. She is also a member of the board's audit committee. The shareholders sue Lori and other board members for not discovering several fraudulent accounting transactions that caused millions of dollars of losses to the shareholders. A court awards the shareholders damages of $5 million.