John Jones is friends with the owner of the local Chevrolet automobile dealership. Each of the four (4) electrician employees is entitled to drive a CREC-owned pickup to, during, and from work since CREC can be called upon to provide electrical service to a customer at any time of the day. John Jones also drives a Chevrolet pickup to, during, and from work, and his spouse, Mary, drives a Chevrolet Equinox to, from, and during work. John Jones is aware that any of these vehicles have the potential to be used by the employee for personal reasons. CREC has a commercial auto policy (business auto coverage form) with covered autos liability (Symbols 7, 8, and 9) and occurrence limits of $500,000; auto medical payments, Symbol 7, $5,000 each insured, uninsured motorists, and underinsured motorists each with limits of $500,000 per occurrence, Symbol 7, comprehensive, Symbol 7, and collision, Symbol 7, each at actual cash value and a deductible of $500. Answer the following questions:

A) John and Mary Jones have a teenage son who is not an employee of CREC. Nonetheless, Mary allows the son to use her Equinox for the son’s personal use. While driving the Equinox, the son caused an accident that resulted in $10,000 in damage to the Equinox, $3,750 of the medical expense to the teenage son, and $7,500 of damage to the automobile involved in the accident. Luckily, the other driver was not injured. What dollar amount for the identified losses, if any, will be paid under the BACS issued to CREC, Inc. and why will it be paid? If the loss will not be covered, explain why.

B) CREC’s insurance agent suggests that CREC raise the limits of its uninsured and underinsured motorists coverage from $500,000 to $1,000,000. The cost is $250 annually. John and Mary are tired of making insurance decisions and ask you for advice. What do you tell them?

C) A CREC employee allows his son to use CREC’s pickup to move the son’s furniture to a new residence. The son loses control of the pickup and it overturns resulting in the destruction of the truck and all of the son’s furniture. A new replacement pickup is 3 $50,000; the value of the son’s furniture is $2,500. Explain the coverages available under CREC’s BAC form policy, if any.

Answer rating: 100% (QA)

A John and Mary Jones have a teenage son who is not an employee of CREC Nonetheless Mary allows the ... View the full answer