Todd and Mary have a $500 deductible and incur $2,500 in damage. How much will their insurer pay?

Todd and Mary have a $500 deductible and incur $2,500 in damage. How much will their insurer pay?

• A. $2,500
• B. $2,000
• C. $500
• D. $1,500

Answer: (B)

When Todd and Mary incur $2,500 in damage and have a deductible of $500, the deductible amount needs to be subtracted from the total damage incurred before the insurance company pays the claim. The purpose of a deductible is to require the insured party to bear a portion of the loss, which helps keep insurance premiums lower. To calculate the insurer's payment: 1. Start with the total damage amount: $2,500. 2. Subtract the deductible: $2,500 - $500 = $2,000. Therefore, the insurance company will pay $2,000 towards the damages after accounting for the deductible. This scenario illustrates how deductibles work in insurance claims, emphasizing the insured's responsibility for the initial amount of loss before the insurer covers the remainder.

When Todd and Mary incur $2,500 in damage and have a deductible of $500, the deductible amount needs to be subtracted from the total damage incurred before the insurance company pays the claim. The purpose of a deductible is to require the insured party to bear a portion of the loss, which helps keep insurance premiums lower.

To calculate the insurer's payment:

1. Start with the total damage amount: $2,500.

2. Subtract the deductible: $2,500 - $500 = $2,000.

Therefore, the insurance company will pay $2,000 towards the damages after accounting for the deductible. This scenario illustrates how deductibles work in insurance claims, emphasizing the insured's responsibility for the initial amount of loss before the insurer covers the remainder.