Which amount will the insurance company pay on a claim filed by a business insured for 80% of the value with an 80% coinsurance plan, where the value of the business is $190,000 and the loss is $165,000?

Question

Quizplus · Accepted Answer

The insured business is covered for 80% of the value, which is $152,000 ($190,000 x 0.8). With an 80% coinsurance plan, the insurance company will pay for 80% of the loss amount that is over the deductible. The deductible amount is not specified in the given information. So, assuming there is no deductible, the insurance company will pay for 80% of the remaining $13,000 ($165,000 - $152,000), which is $10,400 ($13,000 x 0.8). Therefore, the total amount the insurance company will pay is $152,000 + $10,400 = $162,400. Hence, the best choice is B.

Which Amount Will the Insurance Company Pay on a Claim