Assume that Kirby owns the PAP discussed in this chapter and reproduced in Appendix A on page

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Question:

Assume that Kirby owns the PAP discussed in this chapter and reproduced in Appendix A on page 379. His policy has the following limits:

Part A = $100,000

Part B = $5,000

Part C = $100,000

Part D = $1,000 deductible for collision; $500 deductible for other than collision

Assume that each of the events described in the following situations occurs separately. The actual cash value of Kirby's car is $15,000. You are to calculate the amount Kirby's insurer will pay in total (i.e., net after any deductibles that Kirby must pay).

A)Kirby negligently collides with a farm tractor. The tractor is traveling on the highway to get from one farm to another. Kirby was at fault. The farmer successfully sues for $91,000 in bodily injury damages and $21,000 in property damage to his tractor. The lawyers charge $10,000 to defend Kirby in court.

B)Kirby's daughter, Suzy, strikes their home and their second car while learning how to drive. She is sixteen years old and has a learner's permit. Damage to Kirby's home is $40,000, and damage to each car is $7,000. Both vehicles are insured with the same policy.

C)Kirby runs a stop sign and collides with a parked car, causing $5,500 of damage to each vehicle.

D)While using his car to drive to the movies, Kirby is struck by an uninsured motorist. He has $15,000 in medical expenses and lost wages. His car is destroyed as the damage amount is $17,000.

E)Kirby lends his auto to Emma. Emma has her own PAP, with coverage identical to Kirby's. Emma runs over and injures a famous baseball player who recently signed a three-year, $30 million contract. Emma is sued for $30 million.

F)Kirby borrows his neighbor's car for a week while the neighbor is on vacation. Unfortunately, Kirby did $5,500 damage to the neighbor's car while he was driving it by hitting a tree.

G)Kirby hits a deer on Door County Highway A. His car is destroyed.