North Carolina Adjuster Practice Exam

If Francis’ roof repair costs $22,000 and his policy has a $500 fixed deductible and a 3% deductible for wind damage, how much will the insurer cover?

1. $13,000

2. $15,000

3. $22,000

4. $21,500

The correct answer is: $13,000

To determine how much the insurer will cover for Francis’ roof repair costs, it's important to first calculate the total deductible applicable to the situation. Francis’ total roof repair cost is $22,000. He has two types of deductibles on his policy: a fixed deductible of $500 and a percentage deductible for wind damage of 3%. In the case of roof repairs, especially if wind damage is involved, the percentage deductible usually applies. First, calculate the 3% deductible based on the total repair cost: 3% of $22,000 = 0.03 × 22,000 = $660. Now, since the policy has both a fixed deductible and a percentage deductible, we need to use the higher of the two deductibles when determining the total deductible that Francis must pay. The fixed deductible is $500, and the percentage deductible is $660. The amount that Francis needs to pay out of pocket for the deductible is therefore $660. Now, to find out how much the insurer will cover, subtract the deductible from the total roof repair cost: $22,000 (total cost) - $660 (deductible) = $21,340. However, since "A. $13,000" is