Question

Rusty Reft, who lives in Territory 5, carries 10/20/5 compulsory liability insurance along with optional collision that has a $300 deductible. Rusty was at fault in an accident that caused $1,400 damage to the other auto and $3,100 damage to his own vehicle. Also, the courts awarded $12,800 and $9,200, respectively, to the two passengers in the other car for personal injuries.

a. How much will the insurance company pay?


b. What is Rusty’s share of the responsibility?

Answer 1

A = $2,800 B = $12,600

Explanation:

a. How much will the insurance company pay?

The liability insurance will cover the damages to the other car ($1,400) and the personal injury claims ($12,800 + $9,200) up to the limit of $10,000. So the insurance company will pay $10,000.

The collision insurance covers the damage to Rusty's own car, minus the $300 deductible, so the insurance company will pay $3,100 - $300 = $2,800.

Therefore, the insurance company will pay a total of $10,000 + $2,800 = $12,800.

b. What is Rusty’s share of the responsibility?

Rusty is responsible for paying the remaining amount not covered by insurance, which is $1,400 + $3,100 + $12,800 + $9,200 - $12,800 = $12,600.

Therefore, Rusty's share of the responsibility is $12,600.