Frank's Cigar Shop is covered under the Building and Personal Property Coverage Form with limits of $75,000 for business personal property and $150,000 for the building. The policy also has a $500 deductible. When a hurricane hits unexpectedly, the store suffers $20,000 in damage to the building and $25,000 in losses to the contents. In addition, Frank has to pay $1,000 for debris removal. How much will Frank receive from his insurer?

This amount incorrectly assumes that the total payout is calculated without considering the deductible correctly. After adding up the damages ($20,000 for the building, $25,000 for the contents, and $1,000 for debris removal), the total is $46,000. Subtracting the $500 deductible results in a payout of $45,500, not $33,500.

This choice is inaccurate as it overlooks the fact that there are valid claims for damages. Frank's building damage, personal property loss, and debris removal expenses amount to a total of $46,000. Since these losses exceed the deductible, Frank is entitled to a payout, meaning he will not receive $0.

This option miscalculates the total damages and incorrectly applies the deductible. If we subtract the deductible from only the building damage ($20,000 - $500 = $19,500), it ignores the claims for personal property and debris removal, leading to a gross underestimation of Frank’s total recovery.