Question

Bill Buckely has​ split-limit 50​/100​/20 automobile liability insurance on his 2012 Subaru. Driving home from work in a​ snowstorm, he hit a​ Mercedes, slid into a​ guardrail, and knocked down a telephone pole. Damages to the​ Mercedes, the​ guardrail, and the telephone pole were ​$17,603​, ​$3,136​, and ​$9,659 respectively. How much will​ Bill's insurance company​ pay? How much will Bill be required to pay​ directly?

Answer 1

Answer: The answer is given below

Step-by-step explanation:

It should be noted that the split limits approach is used by several auto insurance policies and this simply combines per person and occurrence approach.

For every accident, three dollars amount are being applied. The first limit is simply a per person limit which is the maximum amount that one injured person will get. The second limit is simply the per occurrence limit which is the maximum amount that all the injured persons will get while the third limit applies during the claim of property damage as it is the maximum amount that will be paid for damages by an insurer to property that results from the accident.

since the split is 50/100/20, it implies that $50,000 medical coverage for every injured person, $100,000 injury coverage for all accident victims and then $20,000 for property damage.

1. Bill's insurance company will pay $20000.

2. Amount Bill will pay:

= ​$17,603​ + ​$3,136​ + ​$9,659 - $20,000

= $30,398 - $20,000

= $10,398