68. An Insured has a deductible of $100 and 80%/20% coinsurance. How much will the Insurer pay if the Insured incurs a loss of $1,100 immediately after enrolling in the plan?
Answer: C
The Insurer will pay $800 for the loss incurred.
After the Insured incurs a loss of $1,100, they first need to satisfy their deductible of $100. This leaves a remaining amount of $1,000, which is subject to the 80% coinsurance, resulting in the Insurer paying $800.
A) $100
This option represents the deductible amount that the Insured must pay before the insurance coverage kicks in. It is not the amount the Insurer pays, making this choice incorrect.
B) $200
This amount does not accurately reflect the calculations involved in the coverage. After the deductible is applied, the remaining amount is $1,000, which is then subject to the 80% coinsurance. Thus, this option is also incorrect.
C) $800
This is the correct amount that the Insurer will pay. After the Insured pays the $100 deductible, the remaining $1,000 is divided according to the coinsurance agreement, where the Insurer covers 80%, resulting in a payment of $800.
D) $1,000
This option incorrectly suggests that the Insurer would cover the entire amount remaining after the deductible. Given the coinsurance agreement, the Insurer will only pay 80% of the amount after the deductible has been satisfied, making this choice incorrect.
Conclusion
The correct answer is $800, as it accurately represents the Insurer's payment after the deductible and coinsurance have been applied. All other options fail either by misrepresenting the deductible or misunderstanding the application of coinsurance in the calculation.