If an insured has a Collision deductible of $1,000 and an Other Than Collision deductible of $500, how much, if any, would be paid by the insurer if a covered automobile sustained $2,000 in damage as a result of a single vehicle accident?

Rationale

$1,000.00 will be paid by the insurer.

In this scenario, the insured's vehicle sustained $2,000 in damage, and the applicable deductible for Collision coverage is $1,000. Thus, the insurer will pay the damage amount minus the deductible, resulting in a payout of $1,000.

A ($0. There is no coverage.) YOUR ANSWER

This choice is incorrect because the insured does have coverage for the damages incurred in the single vehicle accident. Although a deductible applies, it does not negate coverage; it simply reduces the amount the insurer will pay.

B ($1,000.00) CORRECT

This is the correct answer, as it reflects the amount the insurer would pay after applying the Collision deductible. With $2,000 in damage and a $1,000 deductible, the insurer pays $1,000, which is consistent with the policy's terms.

C ($1,500.00) YOUR ANSWER

This choice incorrectly assumes that both deductibles are applied in some manner. However, only the Collision deductible is relevant in this scenario as the damage occurred from a single vehicle accident, not involving other than collision circumstances.

D ($2,000.00) YOUR ANSWER

This option is incorrect as it suggests that the insurer would cover the full damage amount without accounting for the deductible. The deductible reduces the payout amount, meaning the insurer pays only $1,000, not the full $2,000 in damages.

Conclusion

In this case, the insurer's payment is determined by the $1,000 Collision deductible applied to the $2,000 damage from the accident. The remaining amount after the deductible is what the insurer will compensate, leading to a payout of $1,000. Understanding how deductibles work is crucial for policyholders to accurately assess their out-of-pocket expenses in the event of an accident.

If an insured has a Collision deductible of $1,000 and an Other Than Collision deductible of $500, how much, if any, would be paid by the insurer if a covered automobile sustained $2,000 in damage as a result of a single vehicle accident?

$1,000.00 will be paid by the insurer.

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