What is the maximum deductible amount for collision coverage on an insured auto?

What is the maximum deductible amount for collision coverage on an insured auto?

• A. $100
• B. $250
• C. $500
• D. $1,000

Answer: (B)

In collision coverage, the deductible is the portion of a covered loss you must pay out of pocket before the insurer contributes. It’s the amount you’re willing to cover yourself, and choosing a higher deductible lowers your premium. For this question, the maximum deductible amount shown in the answer key is $250. That means, within the context of this material, if a collision loss occurs, you would pay up to $250 first, and the insurer would pay the rest of the repair costs (up to your policy limits). Understanding this helps you see why the $250 option is the best choice here: it represents the highest deductible level the material uses as its standard maximum for collision, balancing out-of-pocket exposure with premium savings. Remember, deductibles apply per loss, and higher deductibles reduce premiums but raise the cost you’d owe if a loss happens.

In collision coverage, the deductible is the portion of a covered loss you must pay out of pocket before the insurer contributes. It’s the amount you’re willing to cover yourself, and choosing a higher deductible lowers your premium.

For this question, the maximum deductible amount shown in the answer key is $250. That means, within the context of this material, if a collision loss occurs, you would pay up to $250 first, and the insurer would pay the rest of the repair costs (up to your policy limits). Understanding this helps you see why the $250 option is the best choice here: it represents the highest deductible level the material uses as its standard maximum for collision, balancing out-of-pocket exposure with premium savings.

Remember, deductibles apply per loss, and higher deductibles reduce premiums but raise the cost you’d owe if a loss happens.