Paul has a personal auto policy with a per-person liability limit of $300,000.He also has a personal umbrella policy with a limit of $2,000,000 and a self-insured retention of $1,000.How much will be paid by each policy if a person wins a judgment of $500,000 against Paul as a result of bodily injury arising from the auto accident?

Question

Quizplus · Accepted Answer

Since the judgment is for $500,000 and the per-person liability limit on Paul's auto policy is $300,000, the auto policy will pay its full limit of $300,000. The umbrella policy will then kick in to cover the remaining $200,000. However, since the umbrella policy has a self-insured retention of $1,000, Paul will need to pay the first $1,000 out of pocket. Therefore, the auto policy will pay $300,000 and the umbrella policy will pay $200,000, minus the self-insured retention of $1,000, for a total payout of $199,000.

Paul Has a Personal Auto Policy with a Per-Person Liability