Conway's Hardware suffers $95,000 in fire damage. The building is valued at $450,000, and the owner has it insured for $300,000 with 80% coinsurance. How much will the insurance company pay?

Question

Quizplus · Accepted Answer

With 80% coinsurance, the owner is responsible for 20% of the value of the building ($450,000 x 0.20 = $90,000). Since the owner insured the building for $300,000, the insurance company will cover the remaining value of the building ($450,000 - $90,000 = $360,000). Since the fire damage is less than the value the insurance company covers, the insurance company will pay the full amount of the damage ($95,000). Therefore, the insurance company will pay $95,000.

Conway's Hardware Suffers $95,000 in Fire Damage