A participation or co-insurance clause stipulates that the company will pay some portion of the covered loss in excess of the deductible rather than the entire amount. How much portion of the covered loss may be paid by the company?
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A. B. C. D.C
The participation or co-insurance clause in an insurance policy specifies that the company will pay a portion of the covered loss, rather than the entire amount, after the deductible has been met. The specific percentage of the covered loss that the company will pay depends on the terms of the policy.
Option A, which suggests that the company will pay between 60% and 70% of the covered loss, is not entirely accurate. While some policies may have this specific percentage range, it is not universally applied across all insurance policies with a participation or co-insurance clause.
Option B suggests that the company will pay between 70% and 90% of the covered loss. Again, while some policies may fall within this range, it is not universal.
Option C, which suggests that the company will pay between 80% and 90% of the covered loss, is also not universally accurate.
Option D is the correct answer, as the specific percentage of the covered loss that the company will pay under a participation or co-insurance clause depends on the terms of the policy. It may be any one of the percentage ranges mentioned in options A, B, or C, or it may be a different percentage altogether.
It is essential to read and understand the terms of an insurance policy before purchasing it to ensure that the coverage and payment terms meet the policyholder's needs and expectations.