Greta’s Ski Supply sustained damages during a tornado. How much will Greta receive from her insurer for a total damage of $10,000 to the building and $20,000 to the contents, considering the deductible?

To determine how much Greta will receive from her insurer after the tornado damages, it’s essential to understand how deductibles function in insurance policies. The total damage to the building amounts to $10,000, and the contents sustained $20,000 in damages. Thus, the overall damage claim equals $30,000.

However, the insurer will apply the deductible amount, which is a portion of the loss that the policyholder must pay out-of-pocket before the insurance coverage kicks in. The answer of $30,500 suggests that perhaps Greta is receiving an additional amount above the total damages, which is generally not how deductibles work.

For an accurate figure, if we assume there is a deductible that is subtracted from the total loss, the correct calculation would involve taking the total damages ($30,000) and subtracting the deductible. If she had a deductible of $500, for instance, the payout would be $29,500. This aligns with understanding how insurance typically compensates policyholders, with the total coverage minus any applicable deductible revealing the net amount.

Therefore, the logical conclusion leads to a payout reflecting total damages minus a deductible, rather than an inflated amount beyond the damages sustained. This ensures the payout accurately reflects the compensation owed