Question

Assume you have a home which would cost $120,000 to replace. You currently have the home insured for $85,000. Last night a tornado damaged your home, causing an estimated $25,000 in damage. How much will your insurance company pay for repairing the damage to your home?

Answer 1

Answer:

$22,135

Explanation:

We are given

Estimated damage = $25,000

Amount insured = $85,000

Base on the scenario been described in the question we are to calculate the how much the insurance company will

This can be calculated using this method

Insurance claim = (Estimated damage × amount insured)/ 80% of replacement cost

insurance claim = (25,000×85,000)/80% of 120,000

Insurance money = 2,125,000,000/96,000

Insurance money = $22,135

Answer 2

Answer:

The insurance claim is $22,135

Explanation:

In this question, we are to calculate the amount an insurance company will pay for a damaged house that was insured.

Firstly, it should be noted that at the time of replacement, the insurance company offer the insurance amount at 80% on actual replacement cost.

Thus, the insurance claim is calculated as follows;

Insurance claim = (Estimated damage * amount insured)/ 80% of replacement cost

insurance claim = (25,000 * 85,000)/80% of 120,000

= 2,125,000,000/96,000 = $22,135