A contractor's workers compensation policy has a $500 deductible per claim. If there are 3 claims totaling $15,000 in medical costs, how much will the contractor pay out of pocket?
Correct Answer
D) $1,500
The contractor pays the deductible for each claim: 3 claims × $500 = $1,500 total out of pocket.
Why This Is the Correct Answer
$500 deductible applies separately to each individual claim. With 3 claims, the contractor is responsible for 3 × $500 = $1,500 total out of pocket, regardless of the total medical costs.
Why the Other Options Are Wrong
Option A: $1,000
$1,000 would be the out-of-pocket total for only 2 claims (2 × $500). This answer fails to apply the deductible to the third claim.
Option B: $2,000
$2,000 exceeds the correct calculation and does not correspond to any logical deductible application under this policy structure. It may result from misreading $500 as a different amount.
Option C: $500
$500 would be correct if there were only a single claim or if the policy had a per-occurrence aggregate deductible rather than a per-claim deductible. Here, each of the 3 claims triggers its own $500 deductible.
Memory Technique
Think of 'per claim deductible' as a toll booth — every car (claim) must pay the toll ($500) to pass through. Three cars = three tolls = $1,500 total.
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