34. A liability policy has a per person limit of $200,000 and a per occurrence limit of $600,000. In one covered accident, three people each receive judgments of $350,000. How much will each person receive from the policy
Answer: A
Each person will receive $2,000 from the policy.
In this scenario, each of the three individuals affected by the accident has a judgment of $350,000 against the policy. However, the liability policy has a per person limit of $200,000, which means that each person will only receive up to that limit from the insurance policy.
A) $2,000
This option is incorrect as it misrepresents the actual amount. Each individual has a judgment exceeding the per person limit of $200,000, but they will receive the maximum allowed under the policy, which is $200,000 each, not $2,000.
B) $3,000
This option is also incorrect. Similar to option A, it fails to consider the per person limit of the policy. Each individual can only receive $200,000 despite their higher judgment amounts.
C) $3,500
Option C is incorrect for the same reason. It overlooks the per person limit stipulated in the policy. Each person is entitled to receive no more than $200,000 irrespective of the judgment amounts.
D) $6,000
This option is incorrect as well. It does not align with the policy limits and suggests a total payout that does not reflect the individual limits. Each of the three people is limited to $200,000, not $6,000.
Conclusion
None of the provided options accurately reflect the amount each person will receive according to the per person limit of the policy. Each individual is entitled to a maximum of $200,000, and thus, all other options are incorrect as they do not align with this limit. The core concept tested here is the understanding of liability limits in insurance policies.