MacKenzie has a personal automobile policy with coverage of $25,000/$50,000/$10,

Question

MacKenzie has a personal automobile policy with coverage of $25,000/$50,000/$10,000, $5,000 for medical payments and $250 deductible for collision insurance. How much will her insurance reimburse in each of the following conditions? Will she have any out-of-pocket expenses and if so, how much? (Show your work, make appropriate assumptions where necessary and state your assumptions clearly).

a) MacKenzie runs a red light and collides with another car resulting in the following losses:

- replacement of trailer hitch $200

-replacement of rear bumper $150

-replacement of computer being carried in back seat $300

-replacement of rear windshield $100

b) Driving home from work in a snowstorm, MacKenzie's husband, Bill, who was driving MacKenzie's car, hit a Mercedes, slid into a guardrail, and knocked down a telephone pole. Damages to the Mercedes, the guardrail, and the telephone pole were $8,500, $2,000, and $4,500, respectively.

c) MacKenzie was in an accident where she was found to be at fault. Four passengers were badly injured and were awarded $15,000 each because of her negligence.

Explanation / Answer

A. She will need to pay deductible for collison of $250. Insurance will reimburse remaining $500.

B. Insurance will pay $10000. She will owe ramaining $5000

C. Insurance will only cover $50,000. She will owe $60,000 - $50,000 = $10,000

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