In auto insurance, which statement about payout is correct when the value is within policy limits and a deductible applies?

In auto insurance, which statement about payout is correct when the value is within policy limits and a deductible applies?

• A. Payout equals car value minus deductible.
• B. Payout equals deductible.
• C. Payout equals policy limit regardless of value.
• D. Payout equals car value plus deductible.

Answer: (A)

In auto insurance, when the loss value is within the policy limits, the insurer pays the amount of the loss minus the deductible. The deductible is the portion you pay out of pocket before the insurer contributes, and the rest is covered up to the policy limit. So the payout equals the car’s value (or repair cost) minus the deductible. For example, if the loss is $5,000 and the deductible is $500, the payout would be $4,500. The policy limit only comes into play if the loss exceeds that limit; within limits, you subtract the deductible from the loss value rather than paying the full value or the full limit.

In auto insurance, when the loss value is within the policy limits, the insurer pays the amount of the loss minus the deductible. The deductible is the portion you pay out of pocket before the insurer contributes, and the rest is covered up to the policy limit. So the payout equals the car’s value (or repair cost) minus the deductible.

For example, if the loss is $5,000 and the deductible is $500, the payout would be $4,500. The policy limit only comes into play if the loss exceeds that limit; within limits, you subtract the deductible from the loss value rather than paying the full value or the full limit.