Hawaii Insurance License Practice Exam

How much will an insurer pay if an insured has a $100 deductible and sustains three separate occurrences totaling $300, $200, and $50?

1. $150

2. $200

3. $300

4. $350

The correct answer is: $300

To determine how much an insurer will pay when there is a deductible involved, each occurrence must be considered against the deductible amount. For this scenario, the insured has a $100 deductible, and there are three distinct occurrences with total costs of $300, $200, and $50. The deductible applies to each occurrence separately. 1. For the $300 occurrence, after applying the $100 deductible, the insurer will pay $300 - $100 = $200. 2. For the $200 occurrence, again, after applying the $100 deductible, the insurer will cover $200 - $100 = $100. 3. For the $50 occurrence, because this amount is less than the deductible, the insurer pays nothing. Now, adding the amounts that the insurer pays for each occurrence together results in: $200 (from the first occurrence) + $100 (from the second occurrence) + $0 (from the third occurrence) = $300. This calculation shows that the total amount the insurer will pay is indeed $300.