If an insured has a pair and set coverage for $5,000 and loses one item valued at $500, how much would the insurance pay?

In the context of pair and set coverage, when an insured loses one item from a set, the insurance payment is calculated based on the value of the lost item relative to the total value of the set. In this case, the insured has a pair and set coverage for $5,000, which encompasses the entire set's value.

When one item valued at $500 is lost, the insurance typically pays the value of the lost item, but it also considers that the remaining item persists, which could affect the overall value of the set. The payout would be based on the proportionate loss compared to the entire set's value. Since one item worth $500 is lost from a set valued collectively at $5,000, the remaining set still holds value, leading to a payout that reflects the depreciation of the set due to the loss.

In this scenario, the correct payout of $4,500 represents the remaining value of the set after accounting for the loss of the $500 item, recognizing the impact of the lost item on the overall worth of the remaining pair or set. This adherence to the principle of valuing the loss in such policies reinforces the accuracy of the insurance payout concerning the remaining value of the item set.