If a vehicle sustained $2,000 in damage and the insured has collision coverage with a $1,000 deductible, how much will the insurer pay?

• A. $2,000
• B. $1,000
• C. $1,500
• D. Nothing

Answer: (B)

In this scenario, the insured has collision coverage on their vehicle, which means that the insurance will cover the damages after the deductible is applied. Since the vehicle sustained $2,000 in damage and the insured has a $1,000 deductible, the insurer will subtract the deductible from the total damage amount.

To calculate the amount the insurer will pay, you take the total damage of $2,000 and subtract the deductible of $1,000. This results in a payment of $1,000 from the insurer. Thus, the insured will receive $1,000 towards the cost of repairs. This aligns with how collision coverage typically operates, making the reasoning clear on why the specified amount is correct.