Grace purchased a recliner from XYZ Furniture. After getting it home, she decided to try out the new chair. While leaning back, the chair breaks and Grace injures her neck. She sues XYZ Furniture and is awarded $70,000. Assuming XYZ Furniture's CGL has a Products-Completed Operations limit of $500,000 with a per occurrence limit of $75,000, how much out-of-pocket expense will XYZ Furniture incur if the court costs total $85,000?

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Mathematics

Phillip Bartlett

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Grace purchased a recliner from XYZ Furniture. After getting it home, she decided to try out the new chair. While leaning back, the chair breaks and Grace injures her neck. She sues XYZ Furniture and is awarded $70,000. Assuming XYZ Furniture's CGL has a Products-Completed Operations limit of $500,000 with a per occurrence limit of $75,000, how much out-of-pocket expense will XYZ Furniture incur if the court costs total $85,000?

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Shea Schultz · Answer 1

Step-by-step explanation:

The insurance covers $75,000 per occurrence of incidents for a total of $500,000 for a year period.

The total amount that XYZ has to pay will be the sum of the money awarded to Grace and the court costs.

Therefore,

Total Expense = $70,000 + $85,000 = $155,000

Due to the per occurrence limit, the insurance will only cover $75,000 of the total expenses and the rest will be paid directly by the XYZ furnitures.

Thus,

Amount Paid Directly by XYZ = $155,000 - $75,000

Amount Paid Directly by XYZ = $80,000