A contractor's workers' compensation policy has a $2,500 deductible per claim. If three separate workplace injuries occur with medical costs of $8,000, $4,500, and $1,800, what is the contractor's total out-of-pocket deductible cost?
Correct Answer
B) $6,800
The contractor pays the deductible for each claim up to the actual cost: $2,500 + $2,500 + $1,800 = $6,800. The third claim's deductible is limited to the actual cost of $1,800 since it's less than the $2,500 deductible.
Why This Is the Correct Answer
With a $2,500 deductible per claim, the contractor pays the deductible amount for each separate workplace injury, but never more than the actual cost of the claim. For the $8,000 claim: $2,500 deductible. For the $4,500 claim: $2,500 deductible. For the $1,800 claim: only $1,800 (since the actual cost is less than the deductible). Total out-of-pocket: $2,500 + $2,500 + $1,800 = $6,800.
Why the Other Options Are Wrong
Option A: $7,500
$5,000 correctly calculates two full deductibles ($2,500 × 2) but fails to account for the third claim. Even though the third injury cost only $1,800, the contractor still pays that amount as their portion since it's less than the deductible.
Option D: $5,000
$2,500 incorrectly assumes only one deductible applies regardless of the number of claims. Each separate workplace injury triggers its own deductible, so with three separate incidents, the contractor must pay deductibles for all three claims.
Memory Technique
Remember 'Per Claim, Pay Less': Each claim has its own deductible, but you never pay more than the actual cost of that specific claim.
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