All Season Gifts owns a building valued at $802,000, but has decided to insure it for only $552,000. Their insurance policy stipulates coinsurance of 85%. If a fire were to cause $208,000 in damage, how much would the insurance company pay on the claim? (Round your answer to the nearest cent)

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Quizplus · Accepted Answer

The insurance company would pay $168,425.99 based on the coinsurance formula: (Amount of Insurance / (Value of Property * Coinsurance Percentage)) * Loss = Claim Payment. Here, it's ($552,000 / ($802,000 * 0.85)) * $208,000 = $168,425.99.

All Season Gifts Owns a Building Valued at $802,000, but Has