If Jeremy experiences a covered loss of $85,000, how much will he need to pay out of pocket?

In this scenario, the amount Jeremy will need to pay out of pocket typically refers to the deductible on his insurance policy. The deductible is the portion of a claim that the insured must pay before the insurance coverage kicks in.

If Jeremy experiences a covered loss of $85,000 and the out-of-pocket expense indicated is $2,550, this would suggest that his policy has a deductible of that amount. Therefore, after he pays the deductible, the remaining portion of the loss would be covered by his insurance. In this case, Jeremy would receive compensation for the loss of $85,000 minus the $2,550 deductible, which amounts to $82,450 covered by his insurer.

Understanding the role of deductibles is crucial for anyone involved in insurance or adjusting claims, as it directly affects how much a policyholder can expect to receive from their insurer after experiencing a loss.