South Carolina Insurance Practice Exam

David submits a $500 claim but the insurer only pays $300 due to a past-due amount for premiums. This deduction is due to which provision?

1. Deductible provision

2. Unpaid provision

3. Exclusion provision

4. Coverage provision

The correct answer is: Unpaid provision

The scenario described involves the insurer reducing the claim payment by the amount of past-due premiums owed by David. This situation is directly related to the unpaid provision, which stipulates that if there are outstanding premium payments at the time a claim is made, the insurer is entitled to deduct the amount owed from the claim settlement. This provision serves as a safeguard for insurers, ensuring that policyholders maintain current payments in order to remain eligible for full benefits under their policy. In this case, since David had a $500 claim but owed $200 in unpaid premiums, the insurer only paid out a reduced amount of $300, reflecting the deduction for the past-due amount. Understanding this provision is important for policyholders as it emphasizes the necessity of staying current with premium payments to avoid reduced claim payouts.