Question

For each of the following situations, what amount would the insurance company pay? (Leave no cells blank - be certain to enter "O*" wherever required.) a. Wind damage of $1,400; the insured has a deductible of $500.

Answer 1

For wind damage of $1,400 with a $500 deductible, the insurance company would pay $900. If each driver pays a $1,860 premium annually, the insurance company collects $186,000 to cover all accidents.

Step-by-step explanation:

In the situation described, if there is wind damage of $1,400 and the insured has a deductible of $500, the insurance company would pay the amount of damage that exceeds the deductible. This means the insurance company would pay:

Total Damage - Deductible = Insurance Payout

$1,400 - $500 = $900

The insurance company would therefore pay $900 for the wind damage claim.

Using the provided automobile insurance example, if each of the 100 drivers pays a $1,860 premium, the insurance company collects $186,000, which is used to cover the costs of the accidents that occurred among those drivers.