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Question: Mike took his friend, Donna, out to dinner on her birthday. While driving Donna home, Mike became ill and asked Donna to drive. While driving Mike's car, Donna negligently injured another motorist when she failed to stop at a red light. Mike has an auto insurance policy with a liability insurance limit of $250,000 per person for bodily injury liability. Donna has a similar auto insurance policy with a liability limit of $100,000 per person.

a. If a court awards a liability judgment of $100,000 against Donna, how much, if any, will each insurer pay?

b. If the liability judgment is $300,000, how much, if any, will each insurer pay?

c. Assume that Mike cannot afford to pay the premium and lets his auto insurance policy lapse. At the time of the accident, he is uninsured. If the liability judgment against Donna is $100,000, how much, if any, will Donna's insurer pay?

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Category:- Basic Finance
Reference No.:- M92839198

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