Gary Purchased a Personal Auto Policy (PAP) That Included Collision

question 52

Multiple Choice

Gary purchased a Personal Auto Policy (PAP) that included collision coverage. Gary lost control of his vehicle on an icy road. He slid across the center line into oncoming traffic. Another vehicle hit his car, causing severe damage to it. Ignoring any deductible, what is the insurer's liability for damage to Gary's car?

• A) the greater of the actual cash value or the amount necessary to repair or replace the vehicle
• B) the replacement cost of the vehicle
• C) the lesser of the actual cash value or the amount necessary to repair or replace the vehicle
• D) the original purchase price of the vehicle

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Definitions:

Superior Good

A type of good whose demand increases as the income of individuals increases, contrary to inferior goods.

Demand Curve

A visual chart that illustrates the connection between a product's price and the amount consumers want to purchase.

Price

The monetary value needed to obtain a product, service, or investment.

Quantity Supplied

The amount of a good or service that producers are willing to sell at a given price over a specific period.