45. 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?
Answer: B
$1,000.00
In this scenario, the insurer would pay $1,000 for the damage to the vehicle, as the collision deductible is $1,000. Since the total damage is $2,000, the insured must first cover the deductible amount before the insurance coverage applies.
A) $0. There is no coverage.
This option is incorrect because there is coverage provided under the collision policy. Although the insured has a deductible to meet, the insurer will still pay the amount exceeding that deductible for covered damages.
B) $1,000.00
This option is correct because the insured's collision deductible is $1,000. Given the $2,000 damage, the insurer will cover the damage after the deductible is applied, resulting in a payment of $1,000.
C) $1,500.00
This option is incorrect as it incorrectly combines the deductibles instead of applying only the collision deductible. The insurer pays only the amount after the collision deductible is met, which is $1,000, not the combined total of the two deductibles.
D) $2,000.00
This option is incorrect because it assumes that the insurer would cover the full cost of the damage without accounting for the deductible. The insured must first pay the $1,000 deductible before insurance coverage kicks in.
Conclusion
The correct answer is $1,000 because that amount reflects the insurer's payment after the insured meets the collision deductible. All other options fail to account for the deductible correctly or misinterpret the coverage terms, emphasizing the importance of understanding how deductibles affect insurance payouts.