Question

Sally, the owner of BEO Options, is rear ended while stopping for a school bus. You are assigned the auto PD claim. BEO Options has a Business Auto Policy with Collision coverage and a $500.00 deductible (Symbol 2) and Other than Collision coverage with a $250 deductible (Symbol 2). Sally brings the car to the drive-in and the appraisal reflects damages of $1,175.00 to the rear end, with an estimated repair time of 3 days once parts are received. You advise Sally that she has a $500.00 deductible. She agrees to take the car to the body shop when the parts arrive. 2 days later, after the parts arrive, she drops the car off and picks up a rental you have arranged. You send her a check for $675.00 with a copy of the appraisal. When repairs are completed, Sally picks up her car and returns the rental. You receive a rental bill for $17.25 per day (includes tax) for 5 days, or $86.25. How much will be total payout on this claim?

(A) $ 761.25
(B) $1,261.25
(C) $ 500.00
(D) $ 675.00

Answer 1

The total payout on Sally's auto PD claim would be $761.25, which includes $675.00 for the repair after the deductible, plus $86.25 for the rental car.

Step-by-step explanation:

To calculate the total payout for Sally's auto PD claim, we need to add the payment sent for repairs to the cost of the rental car provided during the repair period. Sally's car had $1,175.00 in damages and she has a $500.00 deductible. Therefore, the insurance paid out $675.00 ($1,175.00 - $500.00 deductible) initially. The rental cost for 5 days was $17.25 per day, making the total rental cost $86.25. The total payout on the claim is the sum of the repair payout and the rental cost, which equals $675.00 + $86.25 = $761.25.