Reference no: EM132173092

Question - Alpha Co. is insured under a commercial package policy that includes the BACF. The only coverage endorsements attached are for providing uninsured and underinsured motorists coverage.

An employee, Joey, used his own auto to make the sales calls. His auto was insured under a Personal Auto Policy (PAP) with a $400,000 single limit of insurance for liability coverage.

While driving of the first customer's office, Joey did not see a traffic light turn red and improperly entered the intersection, colliding with a car that had the right of way. This other car was driven by Kim, who was seriously injured. Joey's airbag deployed, and he received only some bruises that did not require medical treatment. Kim subsequently made a claim for bodily injury to himself and property damage to his car.

Alpha's insurer concluded that Joey and Alpha were legally liable for the $650,000 in damages sustained by Kim.

Before offering a settlement, however, the insurer needs to determine whether the claim is covered under Alpha's liability coverage and, if so, for what amount.

Use DICE analysis to describe the necessary steps and find the amount of coverage from Alpha's commercial auto insurance. The limit of liability coverage is $1,000,000. For each step, please highlight necessary assumptions such as declaration page information for your analysis.