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  1. 1. Bob and Mary Gordon are both employed. Bob is a supervisor for a large automobile repair firm. Marie is a social worker for the State Welfare Department. Bob and Marie have two children. Karen, aged 20, is at�tending college 200 miles from home.Ken, aged 16, lives at home and attends high school. The Gordon�s own 4 vehicles. Marie is the principal driver of a 1-year old sedan, which she uses to drive to and from work. The car is also driven occasionally on state business.carsurance
  2. 2. Bob is the principal driver of a 3-year old customized van, which he usesto drive to and from work The van is also used by the family for fishing,camping and outdoor recreation Karen is the principal driver of a 4-yearold sedan, which she uses at col�lege carsurance and to travel homeon holidays and weekends Ken is the principal driver of a 6-year oldcompact car, which he drives to and from school All vehicles are legallytitled in the names of Robert and Marie Gordon Personal Auto PolicyCoverages No-Fault Auto Insurance does not apply in Gordons stateEndorsement PP 03-03 is the Towing and Labor Costs Coverage anden�dorsement PP 03-11 is the Under-Insured Motorists Coverage withlimits of $100,000 for each acci�dent
  3. 3. Loss Situations The Loss Situations involve the various types ofcoverage provided by the Gor�dons Per�sonal Auto Policy TheirPAP covers not all of these losses, the comments about each lossexplain the coverage that applies or why the loss is not covered LiabilityCoverage The following Loss Situations apply primarily to the LiabilityCoverage (Part A) under the PAP Each loss is a sepa�rateoccurrence Loss - Bob is involved in an accident with another motoristwho claims that Bob did not have the right of way Damage to the otherdrivers car is $5,000 The other motorist also sues Bob for $100,000 andis awarded dam�ages for Bodily Injury in the amount of $50,00�0
  4. 4. The court also awards $2,250 as a prejudgment interest Legalde�fense costs incurred by Bobs insurer are $25,000 Comment - TheProperty Damage Claim of $5,000, the Bodily Injury Claim of $50,000,and prejudgment interest of $2,500 is paid by Bobs insurer under theLiability Section of the PAP The legal defense costs of $25,000 are paidin addition to the amount that Bob is legally required to pay Loss - Bob isconfronted by an irate customer who claims that the brakes of his car arenot repaired properly The mechanic who re�paired the brakes statesthat the brakes are fine To determine who is correct, Bob de�cides toroad test the customers car
  5. 5. While Bob is road-testing the car, the brakes fail and Bob hits anothermotorist The motorist is seriously injured and Bob is personally sued for$200,000 Damage to the customers car is $4,00�0 Bob also hasmedical expenses of $3,000 resulting from the collision Comment - TheBodily Injury incurred by the injured motorist and the Property Damage tothe customers car are clear�ly excluded under the Liability Section ofthe PAP, since Bob was using the cust�omers car in theautomo�bile or garage business The medical ex�pensesin�curred by Bob are excluded under Med�ical PaymentsCoverage, since the injury occurred during the course of employ�mentand benefits are required and available to Bob under the StatesWor�kers Compensation Law
  6. 6. The excluded Liability Losses are Com�mercial Loss Exposures thatwould be covered under a commercial Garage Liability Policy Bobsinjury is covered by the firms Workers� Compensation InsuranceLoss - Ken, Bob and Maries son was driving his girlfriends car After afootball game, they went to a party He was involved in an accident withanoth�er motorist who became permanently disabled from theaccident The police arrested Ken and charged him with driving whileintoxicated
  7. 7. He was required to post a bail bond of $2,500 Ken is later con�victedof driving while intoxicated The in�jured motorist is awarded ajudgment against Ken in the amount of $500,000 The liability limit of thegirlfriends car is $25,000 Comment - Kens girlfriends PAP is primaryand pays the first $25,000 of the judgment The girlfriends policy will alsopay up to $250 for the cost of the bail bond
  8. 8. Gordons PAP pays only $300,000 as Excess Insurance, since that is theapplicable Limit of Liability If Bob and Marie were in�sured under aPer�sonal Umbrella Policy, the remaining $175,000 of thejudg�ment would have been paid by the Umbrella Insurer As a resultof the driving while intoxicated conviction, Ken will most likely beexcluded from future coverage under his parents poli�cy Loss - Marieis attending a profession�al meeting in a large city She rents a car atthe airport While driving to her hotel, she is involved in an accident withanother motorist when she sudden�ly changes lanes without signaling
  9. 9. The other driver is seriously in�jured and is later awarded a judgmentof $250,000 The rental agency carries liability limits of $100,000 on therental car Comment - The loss is covered under the Non-Owned AutoCoverage of the Gordons PAP The first $100,000 of the judgment,however, is paid by the rental agencys insurer as primary in�suranceThe Gordons PAP pays the remaining $150,000 as ExcessInsur�ance
  10. 10. carsurance