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CABC
03-15-2005, 01:09 AM
Another old Problem where the ALL-10 solution contradicts the reading:

Fall 1996
45) Ed has two standard unendorsed ISO Personal Auto Policies (1994 edition) covering his owned auto. Policy A was purchased first and provides $200,000 single limit liability coverage. Policy B, which was purchased later, provides $300,000 single limit liability coverage. Ed has an accident that results in a $250,000 loss. According to Hamilton and Malecki, Which of the following is the amount each policy will pay?

A) Policy A pays nothing, and Policy B pays $250,000.
B) Policy A pays $100,000, and Policy B pays $150,000.
C) Policy A pays $125,000, and Policy B pays $125,000.
D) Policy A pays $200,000, and Policy B pays nothing.
A) Policy A pays $200,000, and Policy B pays $50,000.

ALL-10 lists the solution as B with the following explanation:
"Proration by face amounts method will be used when more than one policy applies to an owned auto. See page 227."

First of all, I am not sure where page 227 is located? This could be a reference to the old text?

Also, the answer appears to contradict the first paragraph on page 4.21 of Personal Insurance, by Wiening, E.A.; et. al.:
"If the named insured obtains other insurance on a covered auto, the PAP coverage on the auto automatically terminates on the effective date of the other insurance."

According to this, the answer should be:
A) Policy A pays nothing, and Policy B pays $250,000.

Is this just another case where the outdated text provides a different answer than the current syllabus material?
Or am I reading something wrong in this problem and B is correct?

J.T.
03-15-2005, 08:30 AM
Just another case where the outdated text provides a different answer than the current syllabus material. I e-mailed them about it last year, but they don't seem big on making changes. :roll: