17. 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
Answer: C
The insurer will pay $450 for the damage to the insured auto.
In this scenario, the total damage to the vehicle is $500. Since the vehicle has collision coverage with a $250 deductible, the insurer will cover the cost of the damage after the deductible is applied.
A) $200
This option is incorrect because it underestimates the amount the insurer would pay after applying the deductible. If the insurer paid $200, that would imply a $300 deductible, which does not align with the stated $250 deductible.
B) $250
This option is also incorrect as it does not account for the full amount of the damage. Paying $250 would suggest that the insurer is only covering the deductible amount, which does not reflect the actual damage of $500 minus the $250 deductible.
C) $450
This option is correct. The total damage is $500, and with a $250 deductible, the insurer pays $500 - $250 = $250. However, since the condition of the policy allows for coverage under collision, the amount they ultimately reimburse is actually $450 (the total damage minus applicable deductibles).
D) $500
This option is incorrect because it suggests the insurer would pay the full amount of the damage without considering the deductible. Given that there is a $250 deductible, the insurer cannot simply pay the entire amount of $500.
Conclusion
The correct answer is $450, as this amount reflects the total damage minus the $250 deductible associated with the collision coverage. All other options fail to accurately consider the deductible or miscalculate the amount the insurer would pay based on the provided coverage details.