Douglas obtained a $100,000 insurance policy on his warehouse. The policy contained an 80 percent coinsurance clause. An accidental fire totally damaged the building that had a fair market value of $250,000 at the time of the loss. How much will Douglas recover from his insurance company?

Question

Quizplus · Accepted Answer

Douglas can recover $100,000 from the insurance company. The coinsurance formula applies only to "partial" losses of property. As the warehouse was completely destroyed by the fire, Douglas can recover only the face value of the policy.

Douglas Obtained a $100,000 Insurance Policy on His Warehouse