Arkansas Insurance Adjuster Practice Exam

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Hank has collision coverage with a $2,000 deductible on his truck. If the truck is damaged and the actual cash value is only $25,000, how much will Hank be indemnified?

Collision coverage will not indemnify Hank for this accident.

Hank will be indemnified by his insurer for $43,000.

Hank will be indemnified by his insurer for $23,000.

Hank's collision coverage will indemnify him up to the actual cash value of his truck minus his deductible. In this case, since the actual cash value of the truck is $25,000 and his deductible is $2,000, the amount Hank will be indemnified for is $23,000 ($25,000 - $2,000 = $23,000). Therefore, option C is correct.

Option A is incorrect because collision coverage does apply in this case.

Option B is incorrect as $43,000 is not the correct amount Hank will be indemnified for.

Option D is incorrect as the indemnification amount would be less than $25,000 due to the deductible.

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Hank will be indemnified by his insurer for $25,000.

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