practice question for PAP

practice question for PAP

by Christine Smith -
Number of replies: 5

The practice question in the 24th edition State manual reads:

22. Ralph has a PAP with Liability of 10/20/10 and Basic PIP with a $1000 ded. He is running one day and is struck as a pedestrian by a car. A week later, he dies. Medical bills are $3000, and lost wages are $1000. How much, if any, will PIP pay in this claim?

A $2000,    B $2,200,   C $7,000,    D $7,200.

My answer :C. Reason:  medical 3000 x.80= $2400, Lost wages 1000 x .60= $600, death= $5000  which totals 8000- 1000 deductible= 7,000

The study manual states the correct answer is however, D= $7,200.

What am I missing?

 

In reply to Christine Smith

Re: practice question for PAP

by Kaylee Colvard -
Take the $1000 deductible out of the medical bills before you take the 80%. $3000 - $1000 deductible = $2000 x 80% Keep the same calculations you have for everything else. Answers $7200
In reply to Kaylee Colvard

Re: practice question for PAP

by Christine Smith -

So the deductible is only applicable to the medical pymts?  Deductible is Not applicable to death, loss wages or replacement services?

In reply to Christine Smith

Re: practice question for PAP

by Kaylee Colvard -
The deductible is a one time "charge" off of the pup coverages. In the crash course i took, they said multiple times the deductible does not come off at the end.....take it off the top. Hope that helps :)
In reply to Christine Smith

Re: practice question for PAP

by Jan Bradburn- -
Christine,

The deductible is taken from the medical expenses only. If there were no medical injuries, the insured would not need the wage loss, replacement services or death benefit.

Jan