A $40,000 fire insurance policy covers a building, which is valued at $50,000, and there is an 80% co-insurance clause.If the building is totally destroyed by fire, the policyholder will receive:
A) $32,000
B) $8,000
C) $40,000.
D) $50,000.

Question

Quizplus · Accepted Answer

The policyholder will receive the full amount of the policy, $40,000, because the policy coverage meets the 80% co-insurance requirement ($40,000 is 80% of $50,000), and the building is totally destroyed.

A $40,000 Fire Insurance Policy Covers a Building, Which Is