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  #1  
Old 10-23-2018, 07:38 PM
shadowrunner shadowrunner is offline
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Default How to deductibles work?

Lets say you have a 400 dollar loss and have a policy with 250 dollar deductable. Which of the following transfer of payments is correct:

A) You pay insurer 250 dollars and they issue you 400 dollars
B) They issue you 150 dollars


Or is it something else?
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  #2  
Old 10-23-2018, 09:11 PM
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temisart temisart is offline
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Quote:
Originally Posted by shadowrunner View Post
Lets say you have a 400 dollar loss and have a policy with 250 dollar deductable. Which of the following transfer of payments is correct:

A) You pay insurer 250 dollars and they issue you 400 dollars
B) They issue you 150 dollars


Or is it something else?
You may want to move this to the exam p forum. This is covered on that exam (from what I remember).
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Old 10-23-2018, 09:39 PM
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Maphisto's Sidekick Maphisto's Sidekick is offline
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Quote:
Originally Posted by shadowrunner View Post
Lets say you have a 400 dollar loss and have a policy with 250 dollar deductable. Which of the following transfer of payments is correct:

A) You pay insurer 250 dollars and they issue you 400 dollars
B) They issue you 150 dollars


Or is it something else?
First party deductible (e.g. property): They pay you 150 dollars.

Third party deductible (e.g. indemnity coverage on liability): They pay the claimant 400 dollars. You pay the insurer 250 dollars.

Self-Insured Retention under a third party claim: The insurer pays the claimant 150 dollars. You pay the claimant 250 dollars.
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Old 10-23-2018, 09:55 PM
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There are also franchise deductibles. Since you've breached the deductible layer of 250 dollars, the insurer pays the claimant 400 dollars. You pay nothing.
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Old 10-24-2018, 12:39 AM
Westley Westley is offline
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All of the above are possible, and there are other configurations (although obscure). Overall answer: They work however the policy language says they work.
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Old 10-24-2018, 12:54 AM
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PeppermintPatty PeppermintPatty is offline
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All of the above are possible, and there are other configurations (although obscure). Overall answer: They work however the policy language says they work.
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Old 10-24-2018, 08:45 AM
Veni Vidi Vici Veni Vidi Vici is offline
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Quote:
Originally Posted by Maphisto's Sidekick View Post
First party deductible (e.g. property): They pay you 150 dollars.

Third party deductible (e.g. indemnity coverage on liability): They pay the claimant 400 dollars. You pay the insurer 250 dollars.

Self-Insured Retention under a third party claim: The insurer pays the claimant 150 dollars. You pay the claimant 250 dollars.
How the second option above often works in reality: They pay the claimant 400 dollars and deduct 250 from the collateral you have posted.
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