Final answer:
Norris's insurance policy is the primary coverage and will pay the full $60,000 for the injuries to all passengers as the total does not exceed the per-accident limit of $100,000, and no single passenger's claim exceeds the per-person limit of $50,000.
Step-by-step explanation:
Norris has borrowed Arnold's truck to pick up some lumber from the hardware store, but unfortunately, a collision occurred, injuring three people in the process. Norris's Personal Auto Policy (PAP) with liability limits is 50/100/50, which means Norris's insurance covers $50,000 per injured person, up to a total of $100,000 per accident, and $50,000 for property damage. Since the first passenger has $15,000 in injuries, the second passenger has $25,000, and the third has $20,000 in injuries, the total injury cost adds up to $60,000, which is within Norris's policy per-accident limit of $100,000.
Consequently, Norris's policy will pay the full cost of injuries for the first and third passengers because each individual's costs do not exceed the per-person limit of $50,000. However, it will only pay $50,000 to the second passenger who has injuries totaling $25,000, as that is the per-person limit. As such, the primary policy will pay out a total of $60,000, which is within the per-accident limit. Arnold's policy would not contribute in this scenario unless Norris's coverage is insufficient. In the case that Norris's coverage was not sufficient, Arnold's coverage could potentially act as secondary coverage, but within this scenario, all expenses are within the limits of the primary policy.