A barbershop suffers $65,000 in fire damage. The shop is insured for $145,000 and has a value of $225,000. There is an 80% coinsurance fire policy. How much will the insurance company pay?

Question

Quizplus · Accepted Answer

The coinsurance percentage is 80%, which means the insured must insure the property for at least 80% of its actual value. In this case, the insured amount ($145,000) is less than the required 80% ($180,000). Therefore, the insured is considered underinsured and must proportionally share in the loss. The insurance company will pay (145,000/180,000) x $65,000 = $52,650.

A Barbershop Suffers $65,000 in Fire Damage