The fire insurance policy on Dullard's home contained a 50 percent coinsurance clause. Dullard's home had a fair market value of $100,000. The face amount of the policy covering the home was $30,000. A hostile fire caused $30,000 worth of damage to the home. To what amount is Dullard entitled?

Question

Quizplus · Accepted Answer

The coinsurance formula for recovery for partial losses is stated as follows: [Amount of insurance carried/(Coinsurance percent × Fair market value)] × Loss = Recovery. The insured can never recover more than the face value of the policy. Therefore, Dullard is entitled to recover $18,000.

The Fire Insurance Policy on Dullard's Home Contained a 50