Question

Ben 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 $15,742; $4,425; and $6,431 respectively. How much will Benz insurance company pay? How much will Ben be required to pay directly?

Bens insurance company will pay $__
Ben will be directly required to pay $__

Answer 1

Answer :

Ben insurance company will pay $20000

Ben will pay $6598

Calculation & explanation :

Split limits are used by insurance co. to separate amounts that they cover in each accident

1st limit is maximum paid per person injured = $50,000
2nd limit is maximum paid to all injured people = $1000,000
3rd limit is maximum paid for property damages = $20,000

Damages caused by this accident were:

Car = $15742
Guardrail = $4425
Telephone pole = $6431
Total damages = $26598

As Bill's limit for property damage is $20,000, he will need to pay $26598 - $20,000 = $6598