Question

A house worth $250,000 has a coinsurance clause of 90 percent. The owners insure the property for $191,250. They then have a fire that causes $80,000 in damage. They will receive $______.00 from insurance.

Answer 1

Answer:

$68,000 will be received from insurance

Step-by-step explanation:

250,000*.9=225000

$191,250/225,000=.85

.85*80,000=$68,000

This is the correct answer

Answer 2

Answer: He will receive only $55080 against the fire insurance that caused damage the property.

Explanation:

Since we have given that a house worth $250,000 has a coinsurance clause of 90 percent .

But the owner insure the property for $191,250.

That means the owner does not insure the property for his full value ,

Amount incurred on fire that caused damage =$80,000

Amount he will receive against his insurance is given by

$80000\times \frac{90}{100}\times \frac{191250}{250000}\\\\=\ 55080$

Hence, He will receive only $55080 against the fire insurance that caused damage the property.