Sophie over-insures her car,worth $10,000,for $12,000.If the car is written off,how much would she receive under an indemnity policy?

Question

Quizplus · Accepted Answer

If Sophie over-insures her car for $12,000 and the car is written off, she will only receive the amount equal to the actual value of the car, which is $10,000. This is because an indemnity policy only pays out the amount that is needed to cover the loss and not the amount that the asset is insured for. Therefore, Sophie would receive $10,000 under an indemnity policy.

Sophie Over-Insures Her Car,worth $10,000,for $12,000