A liability policy has a per person limit of $200,000 and a per occurrence limit of $600,000. In one covered accident, three people each receive judgments of $350,000. How much will each person receive from the policy

Rationale

Each person will receive $200,000 from the policy.

The liability policy has a per person limit of $200,000, meaning that regardless of the total judgments, each individual's claim is capped at this amount. Since each of the three people received a judgment of $350,000, they will only be compensated up to the per person limit.

A ($2,000) CORRECT

This option does not reflect the actual compensation amount per person under the policy limits. Each individual is entitled to receive $200,000; therefore, $2,000 is significantly lower than the per person cap.

B ($3,000) YOUR ANSWER

Similar to option A, this choice underestimates the amount each person can receive based on the policy limits. The per person limit of $200,000 applies, making $3,000 an incorrect figure.

C ($3,500) YOUR ANSWER

This choice also fails to adhere to the established limits of the policy. Each person can collect up to $200,000, rendering $3,500 inadequate and incorrect.

D ($6,000) YOUR ANSWER

While this option suggests a total amount, it does not address the per person limit imposed by the policy. Since each individual can only receive $200,000, $6,000 is far below the maximum allowable compensation.

Conclusion

The liability policy clearly stipulates a per person limit of $200,000, which is the maximum amount payable for each individual's claim arising from the accident. Given the judgments exceed this limit, each of the three individuals will receive $200,000, capped by the policy, which is not represented in any of the other options.

A liability policy has a per person limit of $200,000 and a per occurrence limit of $600,000. In one covered accident, three people each receive judgments of $350,000. How much will each person receive from the policy

Each person will receive $200,000 from the policy.

Related Questions

Related Quizzes

How familiar were you with this question?

Report an Issue

Rate this Practice Test