Final answer:
The CAARP covers minimum liability limits of 15/30/5, representing $15,000 for bodily injury per person, $30,000 for total bodily injury per accident, and $5,000 for property damage per accident. This reflects California's legal insurance minimums and underscores the insurance principle where pooled customer payments must cover the claims, operational costs, and company profits.
Step-by-step explanation:
The question pertains to the California Automobile Assigned Risk Plan (CAARP), which is a program that provides auto insurance to motorists who are unable to obtain coverage in the regular market. The minimum liability limits covered by CAARP are often expressed in a format of split limits, which represent thousands of dollars for bodily injury per person, bodily injury per accident, and property damage per accident, respectively.
Among the provided options, the correct minimum liability limits that CAARP can cover is 15/30/5. This means that CAARP covers up to $15,000 for bodily injury per person, up to $30,000 for bodily injury per accident, and up to $5,000 for property damage per accident. These are the legal minimum insurance requirements in California for motorists.
Using the automobile insurance example provided, we can understand how insurance companies pool risk to offer coverage. Multiple drivers pay into the insurance system so that the funds can cover the damages incurred by accidents within the group. Over time, the average payments into insurance must suffice to cover the claims, the company's operational costs, and allow profits. This demonstrates the balance between customer payments and company costs, which includes meeting the minimum liability coverage like those required by CAARP.