A dwelling with a replacement cost of $150,000 was insured under a Homeowners 3 policy for $105,000 at the time the roof was des

Question

3 years ago

13

A dwelling with a replacement cost of $150,000 was insured under a Homeowners 3 policy for $105,000 at the time the roof was des

troyed by a windstorm. The actual cash value of the loss was $10,000, but it will cost $15,000 to replace the roof. Ignoring any deductible, what will the insurer pay to settle this loss

Business

1 answer:

Mazyrski [523] · Answer 1 · 2022-03-10T00:38:05+03:00

Mazyrski [523]3 years ago

3 0

Answer: $13125

Explanation:

The amount that the insurer will pay to settle this loss will be calculated thus:

= Insured claim × Insurance value / 80% of replacement value

= 15000 × 105,000 /80% × 150000.

= 15000 × 105,000 / 120000

= 13125

Therefore, the insurer will pay $13125