calculating out - of - pocket costs. if a person chooses policy 1 and files a claim for $700 worth of…

calculating out - of - pocket costs. if a person chooses policy 1 and files a claim for $700 worth of repairs, how much will they have to pay out of pocket? $700 $500 $200 $800. policy 1: premium: $800 per year, deductible: $500, liability: $20,000 per person/$100,000 per accident, comprehensive: $10,000, collision: $10,000. policy 2: premium: $1,200 per year, deductible: $1,000, liability: $100,000 per person/$300,000 per accident, comprehensive: $25,000, collision: $25,000

calculating out - of - pocket costs. if a person chooses policy 1 and files a claim for $700 worth of repairs, how much will they have to pay out of pocket? $700 $500 $200 $800. policy 1: premium: $800 per year, deductible: $500, liability: $20,000 per person/$100,000 per accident, comprehensive: $10,000, collision: $10,000. policy 2: premium: $1,200 per year, deductible: $1,000, liability: $100,000 per person/$300,000 per accident, comprehensive: $25,000, collision: $25,000

Answer

Explanation:

Step1: Understand deductible concept

The deductible is the amount the policy - holder pays out - of - pocket before the insurance company starts paying. For Policy 1, the deductible is $500.

Step2: Compare claim amount and deductible

The claim is for $700 worth of repairs. Since the claim amount ($700) is greater than the deductible ($500), the policy - holder pays the deductible amount out of pocket.

Answer:

$500