Claudia insures the contents of her house for $200,000 when they are in fact worth $300,000.If the contract contains a 'subject to average' clause and goods worth $60,000 are stolen,how much is the insurer obliged to pay?

Question

Quizplus · Accepted Answer

Since Claudia insured her contents for only two-thirds of their actual value, the policy is subject to average. This means that in the event of a partial loss, the insurer will only pay out in proportion to the amount of cover taken out.

Thus, if goods worth $60,000 are stolen, the insurer is only obliged to pay out:

= ($200,000 / $300,000) * $60,000 
= $40,000

Therefore, the correct answer is A.

Claudia Insures the Contents of Her House for $200,000 When