Craig submits a $500 claim for medical expenses with a past due premium of $100. How much does the insurer pay?

In this scenario, the insurer will typically reduce the amount of the claim payment by the amount of any overdue premium owed by the policyholder. In this case, Craig has submitted a claim for $500 related to medical expenses, but he also has a past due premium of $100.

The insurer applies a general principle known as "payment offset." This means they deduct the outstanding premium from the total claim amount to ensure that premiums are current before processing the claim payout. Therefore, from the original claim amount of $500, the insurer subtracts the past due premium of $100.

This results in an insurance payment of $400, which is the correct payment amount for the claim after accounting for the premium owed. Understanding this offset practice is important for recognizing how insurers manage claims in relation to policyholder responsibilities regarding premium payments.