Question

Your clients purchased hull coverage in the amount of $20 million. They also carry a P and I policy for $5 million. They were responsible for a collision that caused $22 million damage to a ferry. Indicate how this claim would be paid.

Answer 1

In the incident involving $22 million in damages to a ferry, the client's hull coverage of $20 million would pay for most of the damage, and the remaining $2 million would be paid by the P&I policy.

Step-by-step explanation:

The question involves the application of insurance principles to a maritime incident. Your clients have hull coverage for $20 million and a Protection and Indemnity (P&I) policy for $5 million. In the scenario described, the hull coverage would first be used to pay for the damages up to the policy limit, which in this case is $20 million.

Since the total damage is $22 million, the remaining $2 million would then be covered by the P&I policy, assuming it covers this type of liability. Therefore, the total payment would be split between the two policies, with the hull insurance covering the bulk of the claim and the P&I policy covering the excess.