Washington State Insurance Practice Exam

What do deductible elimination endorsements do?

1. They increase the premium cost significantly

2. They remove the need for the insured to pay deductibles for claims

3. They replace the coverage limits in a policy

4. They limit the number of claims an insured can make

The correct answer is: They remove the need for the insured to pay deductibles for claims

Deductible elimination endorsements are specific provisions added to an insurance policy that remove the requirement for the insured to pay a deductible when a claim is made. This means that in the event of a covered loss, the insured can receive the full benefits from the insurance company without the out-of-pocket expense typically associated with a deductible. This feature can be particularly beneficial in reducing the financial burden on the insured after a claim, as they do not have to first satisfy a deductible amount before receiving their insurance payout. When considering the incorrect options, it is important to note that increasing the premium cost significantly pertains to how endorsements can affect pricing, but this is not the primary function of the deductible elimination endorsement. Similarly, while coverage limits might be affected by different types of policy enhancements, eliminating a deductible does not replace these limits. Lastly, limiting the number of claims is not a function of this endorsement; rather, it focuses solely on the deductible aspect of claims processing.