Craig Rosenberg has a personal injury protection policy that...

Craig Rosenberg has a personal injury protection policy that covers each person in, on, around, or under his car for medical expenses as a result of an accident. Each person can collect up to $\$ 50,000$ . Craig is involved in an accident and three people are hurt. One person has $\$ 23,000$ of medical expenses, one person has $\$ 500$ worth of medical expenses, and Craig himself has medical expenses totaling $\$ 70,000$ . How much money must the insurance company pay out for these three people?

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Key Concepts

Personal Injury Protection (PIP) Insurance

This type of auto insurance coverage pays for necessary medical expenses (and sometimes additional costs) for you and your passengers after an accident, regardless of who is at fault. It ensures that individuals receive timely financial assistance to help cover immediate medical and related costs following an incident.

Policy Limits

Policy limits specify the maximum amount an insurance company will pay for a covered incident within a certain category or for an individual. In this context, a per-person limit means that each person’s expenses are covered only up to the set limit, ensuring that any costs exceeding that amount are the responsibility of the insured.

Claim Payment Calculation

When processing claims, insurers compare incurred expenses against the established policy limits. If a person’s medical expenses are lower than the limit, the insurer pays the full amount; if higher, the payment is capped at the limit. This method ensures that payouts for individual claims do not exceed the predetermined coverage amount.

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