Texas Adjuster Practice Test

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Prepare for the Texas Adjuster Test with comprehensive quizzes, multiple choice questions, and in-depth explanations. Enhance your knowledge and succeed in your exam!

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Mary Johnson has a limit of liability for Coverage A of $250,000 and Coverage B of $125,000 with a 2% deductible. What is her deductible amount?

$2,500
$5,000
$10,000
$15,000

The correct answer is: $5,000

To determine the deductible amount for Mary Johnson's insurance coverage, we need to calculate 2% of the Coverage A limit. The deductible is typically applied to the dwelling or structure coverage (Coverage A), not to coverage for other structures (Coverage B). In this case, Coverage A has a limit of liability of $250,000. Taking 2% of this amount involves multiplying $250,000 by 0.02: \[ 250,000 \times 0.02 = 5,000 \] Thus, the deductible amount comes out to $5,000. This is consistent with typical insurance practices where the deductible applies to the primary structure coverage, which in this case is Coverage A. This method ensures that the policyholder bears a portion of the loss before the insurance coverage kicks in, aligning with standard insurance policies.