Texas Adjuster Practice Test

If a policyholder has a 1% deductible, from which coverage percentage would this amount be deducted?

1. Coverage A

2. Coverage B

3. Coverage C

4. Coverage D

The correct answer is: Coverage A

When a policyholder has a 1% deductible, this amount is typically deducted from the total insured value of Coverage A, which is usually the part of the policy that covers the dwelling or the primary structure. Coverage A provides insurance for the home itself, including the building and attached structures. The deductible is applied to the amount needed to repair or replace the home after a covered loss occurs, meaning the deductible is calculated based on the coverage amount for the dwelling. In this scenario, if a loss occurs and the insurance claim is valid, the 1% would be subtracted from the settlement amount calculated from Coverage A before the insurance payout is finalized. Other coverage types such as Coverage B (other structures), Coverage C (personal property), and Coverage D (loss of use) serve different purposes and would typically not be the basis for residential deductibles related to the home's primary structure. Thus, Coverage A is the appropriate choice for deduction applicability.