11. Jim has a PAP with liability limits of 25/50/25 and $5,000 in medical payments coverage. Jim causes an accident which leaves him with $7,500 in medical costs and $50,000 in property damage to a parked BMW. How much will Jim be out of pocket in total for all damages occurring in this accident?
Answer: C
Jim will be out of pocket a total of $27,500 for all damages occurring in this accident.
Jim's total out-of-pocket expenses will include the medical costs that exceed his coverage and the property damage liability that exceeds his limits. Given his medical expenses of $7,500, Jim will pay $2,500 out of pocket since his medical payments coverage is capped at $5,000. Additionally, he is liable for the full amount of property damage to the BMW, which is $50,000, but his liability limit of $25,000 means he will also be responsible for $25,000 out of pocket. Thus, Jim's total out-of-pocket costs amount to $2,500 (medical) + $25,000 (property damage) = $27,500.
A) $45,000
Option A is incorrect. This figure does not accurately reflect Jim's liability or the limits of his coverage. While it might suggest a massive out-of-pocket expense, the calculations based on his coverage limits and actual costs do not support this amount.
B) $32,000
Option B is also incorrect. This amount appears to misunderstand the coverage limits and the actual costs incurred. Jim's total expenses are lower than this figure, as the calculations show he will only pay $27,500 out of pocket.
C) $27,500
Option C is correct. It accurately reflects Jim's out-of-pocket expenses after considering his medical payments coverage and liability limits. Jim's total costs include the $2,500 he must pay for medical expenses and the $25,000 for the property damage he is liable for, totaling $27,500.
D) $42,500
Option D is incorrect. This amount exceeds Jim's actual out-of-pocket costs as calculated from his liability limits and medical coverage. It does not align with the total expenses he will incur based on the details provided.
Conclusion
The correct answer is definitively $27,500, as it precisely accounts for Jim's medical expenses exceeding his coverage and the full liability for property damage within his policy limits. All other options fail to accurately represent the total costs Jim faces in this accident, either by overestimating or misunderstanding the coverage provided by his policy.