Question

A couple has Coverage A limits of $250,000 on their home located in Ft. Lauderdale, FL. They suffer a wind loss to their roof from a tornado spawned by Hurricane Ernesto that results in an estimate of $11,500.00 for repairs. The adjuster deducts the Florida hurricane deductible of $5,000 from the estimate and pays them $6,500 in settlement of their property claim. This is known as the application of:

(A) A straight deductible

(B) A percentage deductible

(C) A franchise deductible

(D) Depreciation

Answer 1

The couple's property claim is an example of a straight deductible, where a specific amount is deducted from the claim before the insurance company pays out.

Step-by-step explanation:

The couple's coverage of $250,000 and the wind loss estimate of $11,500 indicate a property claim. The adjuster deducts the hurricane deductible of $5,000 from the estimate and pays the couple $6,500 in settlement.

This is an example of a straight deductible. A straight deductible deducts a specific amount from the claim before the insurance company pays out.