Right Censoring with Limits and Deductibles

[dobie]

Please let me know which statement is correct. I think it is number one, since limits are applied before deductibles.

1. Ground up losses above amount u are right-censored.

2. Ground up losses above amount u + d are right-censored.

Thanks guys!

[Kenny]

Policy limits are usually applied before deductibles, but policy maximums are not. Be very careful about the phrasing b/c it could be referring to a maximum payment rather than a total loss limit.

[dobie]

I looked back at the question and it says that u is the maximum insurance payment. I was thinking of it in the context of u being the policy limit.

Thanks for the help - I really appreciate it! I will have to be sure to read more carefully on the exam.