Question

You have purchased a $25,000 Employee Theft policy with $500 deductible from GGG company. During the coverage period you find out that one of your employees has stolen a $30,000 item from your company. How much would the insurance company pay you?

Answer 1

The insurance company will pay $24,500 for the stolen item, which is the $25,000 coverage limit minus the $500 deductible. The stolen item's value exceeds the policy limits, so the policyholder will not be reimbursed for the full amount of the loss.

Step-by-step explanation:

When dealing with an Employee Theft policy, the coverage limit is an essential factor. For a policy with a $25,000 coverage limit and a $500 deductible, the calculation for a $30,000 theft will proceed as follows:

• 
  
• The insurance will cover up to the policy's limit of $25,000.
• 
  
• You will subtract the deductible from this limit, which means the insurance company would pay $24,500 ($25,000 - $500).
• 
  
• Since the stolen item is worth $30,000, and the policy limit is $25,000, the policy will not cover the entire loss, and the insurance payment will be capped at $24,500.

In this scenario, the loss exceeds the policy's coverage limit. Therefore, regardless of the deductible, the insurance company would not be liable for the full amount of the stolen item but would provide the maximum coverage as outlined in the policy.