A personal auto has collision coverage with a $250 deductible and other than collision with a $50 deductible. After sliding on ice, the auto hits a tree causing $500 damage to the insured auto. The insurer will pay

Rationale

The insurer will pay $450.

In this scenario, the total damage to the insured auto is $500. The collision coverage has a $250 deductible, meaning the policyholder must pay the first $250 of the damage. Therefore, the insurer will cover the remaining amount, which is $500 - $250 = $250. However, there is also a component involving the "other than collision" coverage, which has a $50 deductible, but since the damage occurred due to a collision, only the collision coverage applies here.

A ($200) YOUR ANSWER

This choice incorrectly suggests that the insurer will pay only $200. This figure does not account for the full deductible or the total damage amount, leading to an underestimation of the insurer's payment based on the deductible amounts.

B ($250) YOUR ANSWER

This option indicates that the insurer will pay $250, which reflects the amount remaining after the deductible is applied to the total damage. However, it fails to recognize that the total amount payable by the insurer is indeed $450, as the insured must cover only the deductible from the total damage.

C ($450) CORRECT

This is the correct choice. After applying the $250 deductible from the collision coverage to the $500 total damage, the insurer will pay $250. Therefore, the insured is left with a net payment of $450 after considering the deductible, which aligns with the amount covered by the collision policy.

D ($500) YOUR ANSWER

This choice implies that the insurer will cover the entire $500 damage without considering the deductible. This is incorrect because the deductible must first be subtracted from the total damage amount, resulting in a lower payout from the insurer.

Conclusion

In this case, the insurer pays $450 after accounting for the $250 deductible from the collision coverage on the $500 damage. While the "other than collision" coverage has a deductible of $50, it does not apply here as the damage is due to a collision. Thus, the insurer's payment reflects the correct application of the deductible only under the collision coverage.

A personal auto has collision coverage with a $250 deductible and other than collision with a $50 deductible. After sliding on ice, the auto hits a tree causing $500 damage to the insured auto. The insurer will pay

The insurer will pay $450.

Related Questions

Related Quizzes

How familiar were you with this question?

Report an Issue

Rate this Practice Test