Solve the problem using the table below. In addition, options can be added to th

Question

Solve the problem using the table below.

In addition, options can be added to the base coverage including the following: identity theft/fraud protection-$20/year; sewer/sump pump backup protection-$75/year. Extended coverage endorsements beyond the maximum coverage amounts can also be added for specific personal property. Endorsements can be added for: jewelry, watches, and furs-$0.85/$100/year; camera equipment-$1.35/$100/year;computer equipment-$0.95/$100/year; fine art and collectibles-$1.10/$100/year; firearms and accessories-$1.45/ $100/year; and portable tools-$3.25/$100/year.


A home with a market value of $320,000 is insured for $288,000 in a policy that contains an 80% coinsurance clause. Find the part of a loss due to fire that the insurance company will pay.

$3263
$2900
$320,000
$288,000

Explanation / Answer

Answer: 80% coinsurance policy means that you must insure atleast 80% of the home market value if you want to get back full damage cost through fire, flood etc. if you have insured for below then 80% then only in proportion of that amount you would be reimbursed in case of damage not the full amount.

80% of 320000 = $256000

Insured for $288000

Insured amount is above 80%.Company will reimburse for the full amount of the house and will pay any amount of damages up to the market value of the house

option C is the answer

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