If an insured has a household policy with a £100 excess and a valid claim for £600, what is the payout?

If an insured has a household policy with a £100 excess and a valid claim for £600, what is the payout?

• A. £600
• B. £500
• C. £100
• D. £700

Answer: (B)

In the scenario presented, the insured has a household policy that includes a £100 excess. The excess is the amount that the insured agrees to pay towards a claim before the insurer pays the remaining amount. When a valid claim of £600 is made, the payout calculation occurs by subtracting the excess from the total claim amount. Thus, the total payout from the insurer would be the claim amount (£600) minus the excess (£100). This results in a payout of £500, which reflects the insurer's responsibility after the insured has met their excess obligation. Understanding the concept of the excess is crucial, as it affects the net amount received in a claim and is a common feature in many insurance policies. Therefore, the correct answer is indeed £500, as it accurately represents the amount payable to the insured after accounting for the excess.

In the scenario presented, the insured has a household policy that includes a £100 excess. The excess is the amount that the insured agrees to pay towards a claim before the insurer pays the remaining amount.

When a valid claim of £600 is made, the payout calculation occurs by subtracting the excess from the total claim amount. Thus, the total payout from the insurer would be the claim amount (£600) minus the excess (£100).

This results in a payout of £500, which reflects the insurer's responsibility after the insured has met their excess obligation. Understanding the concept of the excess is crucial, as it affects the net amount received in a claim and is a common feature in many insurance policies. Therefore, the correct answer is indeed £500, as it accurately represents the amount payable to the insured after accounting for the excess.