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Understanding Co-Insurance and Fault in Vehicle Insurance: A Comprehensive Analysis of Policy Applications

An analysis of co-insurance and fault in vehicle insurance, explaining their impact on policy applications and insurance claims.

Chloe Martinez
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Understanding Co-Insurance and Fault in Vehicle Insurance: AComprehensive Analysis of Policy Applications1.In a co-insurance policy with an 80% coverage, where the insured has a deductible and thetotal loss amounts to $100,000, how much will the insured (Marisa) receive as a benefit, and howmuch will she need to cover herself?Solution 1This type of Insurance is not valid contract like life insurance where the insured get full policybenefit. Here the benefit received will be equal to loss of the insured after the deductible. Alsosince it is a co-insurance with 80% cover, the value of benefit will be 80% of the loss i.e.$80,000. The Rest 20% of the loss i.e. $20,000 has to be taken up by Marisa.2.In the following scenarios, how would the insurance coverage apply?a) McKenzie runs a red light and collides with another car. The total cost of damages is $750.What will McKenzie bear, given that insurance typically covers accidents that are not the fault ofthe driver?b) McKenzie’s husband is not at fault in an accident, and the total expenses amount to $15,000($8,500 + $2,000 + $4,500). How much will McKenzie be reimbursed, considering the insurancecovers the vehicle and not the driver?

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Finance

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