How much will Smith pay as the deductible for damage caused by vandals to ten vehicles worth $4,000?

To arrive at the amount Smith will pay as a deductible for damage caused by vandals to the ten vehicles, it’s essential to understand the concept of a deductible in an insurance policy. A deductible is the amount that the policyholder agrees to pay out of pocket before the insurance coverage kicks in to cover the remaining damages.

In this scenario, if the total value of the ten vehicles is $4,000 and the deductible is likely set by the insurance policy, it would indicate that Smith will be responsible for a portion of that total in the event of a loss, particularly in cases of vandalism. The deductible amount can vary based on the terms of the insurance policy.

Given that the correct answer states $2,500 as the deductible, it suggests that the terms of Smith's insurance policy impose a deductible that accounts for a substantial portion of the overall value of the damaged vehicles. It is not $0 because a deductible must be paid in situations like vandalism, and it is not the full value of the vehicles, as that would imply that insurance coverage would not apply at all.

Thus, by understanding the role of deductibles in insurance policies, particularly in scenarios involving multiple vehicles and potential vandalism, it becomes clear that Smith would indeed be liable