Question

John owns and drives a 2005 Lexus 3300. He gets into an accident with another vehicle. Both drivers report the accident to their carriers but each claims the other is at fault. John can't afford to wait for resolution of the property damage claim with the other carrier so he files a collision claim with his own insurance company. His Personal Auto Policy provides Collision with a $500 deductible and Comprehensive with a $250 deductible. The appraisal for damage to the front bumper, right front fender, and side panel totals $2,732.00. During repairs, the body shop finds some hidden damage and requests a supplemental repair authorization of $275.00. How much would you pay?

(A) $2,507.00
(B) $2,482.00
(C) $2,257.00
(D) $3,007.00

Answer 1

John's insurance company pays a total of $2,507.00 for the damages to his car after accounting for the $500 deductible and the supplemental $275.00 for hidden damages.

Step-by-step explanation:

The question pertains to the settlement of a collision claim under an auto insurance policy. When John files a claim for the accident damages, his insurance company will cover the costs minus his deductible. The original appraisal for repair was $2,732.00. Since John has a $500 deductible for collision, he must pay this amount out of pocket, and the insurance covers the rest. Therefore, the insurance pays $2,732.00 - $500.00 = $2,232.00 initially. When additional hidden damage is found and a supplemental authorization of $275.00 is required, the insurance also covers this additional amount. Thus, the total paid by the insurance will be $2,232.00 (initial payment) + $275.00 (supplemental) = $2,507.00, which means that option (A) $2,507.00 is correct.