Suppose that at the time of a $40,000 loss, your home has a replacement value of $200,000.And suppose you have $140,000 worth of insurance on it.Calculate the amount that you would receive from the insurer.
A)$35,000
B)$40,000
C)$20,000
D)$17,500
E)$30,000

Question

Quizplus · Accepted Answer

The amount received from the insurer is calculated using the formula for coinsurance: (Amount of Insurance / (Insurance to Value Ratio * Replacement Value)) * Loss = Claim Payment. Here, it's ($140,000 / ($200,000 * 0.8)) * $40,000 = $35,000.

Suppose That at the Time of a $40,000 Loss, Your