Personal Auto PolicyQuestion 406 of 474
Repairing the insured's car after an at-fault collision would cost $9,400, but the car's actual cash value is $8,000. With a $500 collision deductible, the insurer pays:
a.$8,000, the value of the car with no deductible taken
b.$7,500, the actual cash value less the deductible
c.$9,400, since the repair estimate sets the amount owed
d.$8,900, the repair estimate less the deductible amount
Explanation
Part D pays the lesser of the auto's actual cash value or the cost to repair or replace it with like kind and quality, so the $8,000 value caps this loss: $8,000 - $500 = $7,500. Paying the $9,400 estimate less the deductible would hand the insured more than the car was worth and breach indemnity. The deductible still comes off a total loss.
This topic, taught in full in the Personal Lines Insurance Producer guide. Personal Lines Insurance Producer — Complete Study Guide (2026) — PDF + EPUB, $19.99 · 14-day refund →
Practice all 474 questions free — no signup required.
Own the complete Personal Lines Insurance Producer guide — PDF + EPUB, $19.99 →
Related questions on this topic
- Rising flood water fills the insured's parked car and ruins it. Under a personal auto policy carrying both physical damage coverages, the loss is:
- Vandals scratch the paint and slash the seats of a parked car, causing $1,250 in damage. The auto carries a $250 other-than-collision deductible. The insurer pays:
- Physical damage coverage on a personal auto policy is best described as:
- In one policy year an insured has a $2,000 hail loss and, four months later, a $3,000 collision loss. Deductibles are $250 other than collision and $500 collision. The insurer pays in total:
- The insured's car is stolen and never recovered. Its actual cash value at the time of the theft is $14,000 and the other-than-collision deductible is $250. The insurer pays:
- Actual cash value, the measure used to settle a physical damage loss, is:
Last reviewed: · editorial process
PrepPass team · Verified against California Personal Lines Insurance License Exam · How we review