Veda owned a diamond necklace. She entered into an insurance contract for coverage of the necklace. Under the terms of that contract, she was required to pay $500 per month. After Veda paid the premium for two months, the necklace was stolen. Her insurance policy covers loss by theft and the insurance company admits that it must pay a benefit to her. That policy, however, contains a "deductible." That means that the benefit that Veda is entitled to receive from the insurance company will be reduced by the amount that she actually paid as premiums: $1000.

Question

Quizplus · Accepted Answer

A deductible is an amount that the policyholder must pay out of pocket before the insurance company pays a claim, not the amount of premiums paid.

Veda Owned a Diamond Necklace