Question

David submits a $500 claim for medical expenses. There is a past-due amount owed for insurance premiums of $200. As a result, the insurer only pays $300 for the claim. This deduction came as a result of which provision?

Answer 1

David's $200 deduction from his $500 medical expenses claim was due to past-due insurance premiums. The insurance company applied the outstanding premium amount to his claim, resulting in a reduced payout of $300.

Step-by-step explanation:

The deduction from David's insurance claim was a result of the premium payment provisions within his insurance policy. Insurance policies typically require that policyholders stay current on their insurance premiums to maintain full coverage.

In this scenario, David had a past-due amount of $200 for insurance premiums. Therefore, when he submitted a $500 claim for medical expenses, the insurer applied the $200 past-due premium to the claim, hence the insurer only paid $300 for the claim.

This mechanism is in place to protect the insurance company's financial interests and ensure a policyholder's responsibility for their contractual obligations.