The deductible is the maximum amount of money you will have to pay out of your pocket for a car accident, therefore the correct answer is $700. This also implies the correct answer is C.
If you take an insurance policy, the amount you pay each month to keep your insurance is called premium. In the case presented, the $200 monthly premium enables you to file a claim in case of any unforeseen circumstance occurs.
Premium is the amount of money you must pay monthly to keep your insurance. If you register for any insurance policy, your insurer will charge a premium, which is the amount you have to pay for the full cost of your insurance.
Listed below is some of the insurance policy that premiums are paid for.
Also, the cost of premium depends on several factors and these include
A deductible is to the amount of money a policyholder must pay in an insurance claim before insurance coverage comes into effect and the insurer starts payment.
Simply put, it is the amount a policyholder must pay out of their pocket before the insurance company will make any payment.
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The option C is correct. The maximum amount you will have to pay out of pocket for a car accident before your insurance covers your cost is $700. When you have an auto insurance policy of $200 monthly premium and $700 deductible.
Further Explanation:
Deductible amount:
The deductible is the amount that the insured person has to pay for any type of insurance before the insurance company starts to pay. An insurance company pays for the damages or loss after a specific limit. This limit is known as the deductible.
Out of pocket expense:
Out of the pocket, the expense is the maximum amount of expenses that the insured person has to pay for the damages, he has faced. It includes the deductible, coinsurance, and co-payment. Premium paid on the insurance policy is not considered in the out-of-pocket expenses. As this is the direct cost that is necessary to get the insurance.
Out-of-pocket expenses in case of a car accident:
In this situation, the deductible amount is $700. The amount of $200 is considered as the direct costs. This is not the out of pocket cost. Therefore, $700 will be considered as out-of-pocket expenses.
Learn more:
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Answer details:
Grade: Middle School
Subject: Banking
Chapter: Insurance
Keywords:
an auto insurance policy, monthly premium, deductible, maximum amount, out of pocket, car accident, insurance, covers, $700, co-payment premium, considered, your cost, direct cost, banking,
