A building worth $200,000 sustains $10,000 in damage.It was covered by a $120,000 policy with an 80 percent co-insurance clause.The indemnity paid by the insurer will be $7,500.

Question

Quizplus · Accepted Answer

The indemnity is calculated as (Insurance Carried / Insurance Required) x Loss. Insurance Required is 80% of $200,000, which is $160,000. The indemnity is ($120,000 / $160,000) x $10,000 = $7,500.

A Building Worth $200,000 Sustains $10,000 in Damage