Florida 2-20 General Lines Agent (Property, Casualty, Commercial Lines and Florida Law)Property InsuranceEasy
A homeowner's dwelling is severely damaged by a hurricane. The policy has a $300,000 dwelling limit, a 2% hurricane deductible, and a $1,000 All Other Perils (AOP) deductible. The estimated hurricane damage is $75,000. How much will the homeowner receive for this claim, assuming no other coverages apply and the damage is solely from the hurricane?
- A$74,000
- B$73,000
- C$70,000
- D$72,000
Show answer & explanationAnswer & explanation
Correct answer: C. $70,000
The hurricane deductible is 2% of the $300,000 dwelling limit, which is $6,000. Subtracting this from the $75,000 damage results in a $69,000 payout.
Why the other options are wrong
- A. This miscalculates the hurricane deductible or subtracts the AOP deductible in error.
- B. This is an incorrect calculation, possibly mixing deductibles or miscalculating the 2%.
- D. This incorrectly subtracts the AOP deductible or miscalculates the hurricane deductible.
Hurricane Deductible
A specific deductible applied to losses caused by hurricanes, often expressed as a percentage of the dwelling's insured value.
- Applies only to hurricane-related damage.
- Typically a percentage (e.g., 2%, 5%) of the dwelling coverage.
- Can be a higher amount than the 'All Other Perils' deductible.
Memory trick: Hurricane's bite, percentage's might, dwelling's worth, then claim's new birth.