Texas Adjuster Practice Test

What percentage of Coverage A must be deducted when calculating the payout for a claim under a 1% deductible?

1. 0.5%

2. 1%

3. 2%

4. 1.5%

The correct answer is: 1%

When calculating the payout for a claim under a 1% deductible, the appropriate deduction to consider is indeed 1% of Coverage A. This deductible applies to the total amount of the insured dwelling (Coverage A) for each claim. For instance, if a homeowner has a dwelling insured for $300,000 and experiences a covered loss of $50,000, the deductible would amount to $3,000 (which is 1% of $300,000). Therefore, in the claim payout calculation, the insured would only receive the claim amount minus the deductible: $50,000 - $3,000 = $47,000. This method ensures that the insurance policy operates within the terms set by the deductible agreed upon at the inception of the policy. In this case, understanding the percentage deducted is crucial for policyholders to grasp how much will ultimately be paid out after a loss.