Suppose you have just 30/60/40 liability insurance. You hit another motorist (and are at fault because you were texting) and cause $60,000 worth of damage to his 1986 Mustang. Four people were in the car. Their medical bills totaled $102,000. Your car also sustains $1,500 worth of damage and your medical bills come out to $250.
a. What does your insurance company pay? Show breakdown.
b. What are you liable to pay? Show breakdown.

You are liable to pay = $42,000 plus $20,000 plus $1,500 plus $25 = $63,525

Explanation:

Amount Covered by Insurance

Medical bill upto $30,000 per person, upto a total of $60,000 for all passengers.

P1 = $25,000

P2 = $2,000

P3 = $5,000

P4 = $28,000 [Rest $42,000 for passenger 4 would come out of your pocket as the liabilities ($70,000) exceed the limit of $30,000]

$25,000 plus $2,000 plus $5,000 plus $28,000 = $60,000

Property Damage: Property damage limit is $40,000 hence, rest $20,000 will come out of your pocket.

Liability insurance doesn't pay to repair or replace your car or to treat your injuries. Hence, $1,500 worth of damage and your medical bills of $25 will be borne by you too.

Insurance Company is liable to pay = $60,000 plus $40,000 = $100,000

You are liable to pay = $42,000 plus $20,000 plus $1,500 plus $25 = $63,525

3,500 beverages

explanation:

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