An insured has $5,000 of medical coverage on a personal auto policy at the time of a covered accident. The insured and two passengers are injured. Medical treatment costs $7,000 for the insured, $4,000 for the first passenger, and $8,000 for the second passenger. How much will the policy pay under medical payments coverage?

Accepted Solution

Answer: 14,000 $ Max will be paid and 5000$ per person.Step-by-step explanation:In this case, we can assume the following:1. That the policy covers only the insured one and not the passengers2. The policy cover all the injured. Now, the policy covers 5000$ of medical treatment, so, the medical treatment for the insured is 7000$.To this quantity you'll have to take out the policy coverage which is 5000$, so: 7000 - 5000 = 2000$.Finally, we just have to to the sum, of all quantity, because the passengers are not included in the policy, therefore:8000 + 4000 + 2000 = 14000 $.That is the maximum paid of all, and 5000$ will pay the policy for the injured only.Now, if we assume that the passengers are also covered by the policy, then:7000 - 5000 = 20008000 - 5000 = 30004000 - 5000 = -1000 it won t pay anything.So if we sum 5000 + 5000 + 4000 = 14000$.We got the same result assuming the policy with all.Therefore the final answer is that the policy will pay 14000$ for all.