The insurance carrier used by Pinnacle Computer Systems specifies 65% coinsurance. The company recently incurred $420,000 in damages from flooding. The building was valued at $625,000, but was only insured for $320,000. What amount will be paid by the insurance company for the loss? (Round your answer to the nearest cent)

Question

Quizplus · Accepted Answer

To determine the amount paid by the insurance company, we use the formula for coinsurance: (Amount of Insurance / (Coinsurance Percentage * Value of Property)) * Loss = Claim Payment. Plugging in the values: ($320,000 / (0.65 * $625,000)) * $420,000 = $330,830.77.

The Insurance Carrier Used by Pinnacle Computer Systems Specifies 65