If Joe's Personal Auto Policy has Liability limits of 25/50/25, what is the total cost to the company for Joe's claims involving multiple lawsuits?

If Joe's Personal Auto Policy has Liability limits of 25/50/25, what is the total cost to the company for Joe's claims involving multiple lawsuits?

• A. $65,000
• B. $78,000
• C. $85,000
• D. $100,000

Answer: (A)

To understand why the total cost to the company for Joe's claims involving multiple lawsuits is $65,000, it's essential to dissect the meaning of the liability limits outlined in Joe's Personal Auto Policy, which are 25/50/25. The liability coverage is broken down into three parts: - The first number (25) represents the maximum payment for bodily injury per person injured in an accident. - The second number (50) indicates the maximum total payout for all bodily injuries resulting from a single accident. - The third number (25) signifies the maximum payment for property damage in a single accident. In Joe's case, if multiple lawsuits arise from the same incident, the maximum payout for bodily injury to any one person is $25,000, with a total cap of $50,000 for all injured parties combined. Additionally, property damage can be covered up to $25,000. If we consider a scenario where Joe's claims involve multiple lawsuits leading to injuries, and the costs for bodily injuries exceed the policy limits, the payouts will still adhere to the maximums set by the policy. Therefore, if two individuals were injured in an accident, Joe's policy would cover a maximum of $25,000 for one person's injuries

To understand why the total cost to the company for Joe's claims involving multiple lawsuits is $65,000, it's essential to dissect the meaning of the liability limits outlined in Joe's Personal Auto Policy, which are 25/50/25.

The liability coverage is broken down into three parts:

• The first number (25) represents the maximum payment for bodily injury per person injured in an accident.

• The second number (50) indicates the maximum total payout for all bodily injuries resulting from a single accident.

• The third number (25) signifies the maximum payment for property damage in a single accident.

In Joe's case, if multiple lawsuits arise from the same incident, the maximum payout for bodily injury to any one person is $25,000, with a total cap of $50,000 for all injured parties combined. Additionally, property damage can be covered up to $25,000.

If we consider a scenario where Joe's claims involve multiple lawsuits leading to injuries, and the costs for bodily injuries exceed the policy limits, the payouts will still adhere to the maximums set by the policy. Therefore, if two individuals were injured in an accident, Joe's policy would cover a maximum of $25,000 for one person's injuries