Below is a sample Auto Insurance Policy
used to illustrate how an auto claim might be viewed and settled by the insurance company.
- What Happened?: The insured let a friend borrow his car for the day and caused a very serious accident.
- Insured’s car was “totaled”.
- The other car sustained damages of $20,000.
- The friend suffered injuries of $15,000
- The driver of the other car was seriously injured and filed suit which was settled for $250,000.
- What Was Covered?:
- Insured’s car was valued at $25,000 and was covered under Collision for the full amount minus the deductible ($25,000 - $1,000 = $$24,000).
- Damage to the other car was covered under Property Damage Liability for the full amount of $20,000.
- Medical expenses for his friend were covered under Medical Payments up to the policy limit of $5,000. This left a balance of $10,000 which became the responsibility of the insured.
- The settlement of $250,000 was covered under Bodily Injury Liability for the entire amount.
- Explanation: Even though the insured was not involved in the accident, he is still responsible for $11,000. This consists of: his collision deductible amount of $1,000 as well as $10,000 for medical payments in excess of the policy limit of $5,000.