PIP Help

PIP Help

by Stephen Charles Schofield -
Number of replies: 2

I've run into a question and I can't find out how to reach the answer. 

The question reads as follows:

Ralph has a PAP with Liability of 10/20/10, and basic PIP with a $1,000 deductible. He is running one day and is struck as a pedestrian by a car. A week later he dies. Medical bills are $3,000, and lost wages are $1,000. How much, if any, will PIP pay in this claim?

a. $2,000 b. $2,200

c. $7,000 d. $7,200

The correct answer is D. $7,200

So, here's what I know: PIP will only pay 80% of the $3k medical cost = $2.4k. PIP will only pay %60 of the $1k lost wages = $600. $2.4K Med + $600 LW = $3k. If the answer is $7.2k, then where is the remaining $4,200 coming from, and where does the $1k deductible apply? Does it apply to medical payments, or lost wages?

In reply to Stephen Charles Schofield

Re: PIP Help

by Michael Ballough -
Deductible applies only to the medical payments before you deal with the 80%. So it's worked out like this: 60% of 1000 for lost wages: $600 80% of 2000 for med pay: $1600 $5000 for death benefits And you get $7200. Hope I explained it well enough
In reply to Stephen Charles Schofield

Re: PIP Help

by Jan Bradburn- -
Stephen, Michael provided a good explanation of how this problem is calculated. Always remember to subtract the deductible from the medical costs before applying the percentages. Jan