Question

Theresa has only a basic 25/50/25 liability policy on her vehicle. her son borrowed it and caused an accident where he and two passengers were injured. one passenger suffered $30,000 in damages and the other passenger and theresa's son each suffered $10,000 in damages. damage to the other car involved in the accident was $20,000. theresa's vehicle, worth $7,500 was totaled. how much will the insurance company pay in total damages?

Answer 1

According to Theresa's 25/50/25 liability policy, the insurance will cover $25,000 for the first passenger, $20,000 for the second passenger and her son, and $20,000 for the other car, totaling $65,000 paid out. Theresa's vehicle damage is not covered by the policy.

Step-by-step explanation:

When evaluating how much the insurance company will pay in total damages, we need to break down the expenses according to Theresa's 25/50/25 liability policy. Here is what each number in her policy represents:

• 
  
• $25,000 for bodily injury per person
• 
  
• $50,000 for total bodily injury per accident
• 
  
• $25,000 for property damage per accident

Breaking down the costs incurred from the accident:

• 
  
• First passenger's damages: $30,000
• 
  
• Second passenger's damages: $10,000
• 
  
• Theresa's son's damages: $10,000
• 
  
• Damage to the other car: $20,000
• 
  
• Total cost: $70,000

Now, we calculate how much the insurance will cover:

• 
  
• The first passenger's coverage is capped at $25,000 due to the per person limit.
• 
  
• The second passenger and Theresa's son's injuries total $20,000, which falls under the per accident limit of $50,000.
• 
  
• The damage to the other car is $20,000, fully covered by the $25,000 property damage limit.

Adding these up, the total amount the insurance company will pay is:

$25,000 (first passenger) + $20,000 (second passenger and son) + $20,000 (other car) = $65,000.

It's important to note that Theresa's policy does not cover the damages to her own vehicle. Therefore, the insurance payout will not include the $7,500 value of Theresa's totaled vehicle.

Answer 2

Given:
25/50/25 basic liability on her car.

25 - represents the bodily injury per person. 25 stands for $25,000 maximum payout per injured person.

In this case, 2 persons were injured excluding the son. The person who suffered $30,000 will only receive $25,000 from the insurance company. The person who suffered $10,000 will receive $10,000 from the insurance company.

50 - represents the bodily injury per accident. 50 stands for $50,000 maximum payout per accident. In the above case, the two injured passengers totalled $35,000, which is below the maximum payout.

25 - represents the amount of property damage. 25 stands for $25,000 maximum payout. The other car suffered a damage of $20,000 so the insurance company will payout $20,000.

Total payouts are:
passenger 1 - 25,000
passenger 2 - 10,000
car damage - 20,000
total payout from insurance: $55,000

Since this is an at-fault incident, Teresa will have to payout $5,000 to passenger 1 to cover the $30,000 damage. She will have to personally answer for the $10,000 cost of damage to her son as well as the $7,500 damage to her vehicle.