The Rocket Manufacturing Company insures its plant against loss by fire for $900,000, under a policy...
- The Rocket Manufacturing Company insures its plant against loss by fire for $900,000, under a policy with an 80% coinsurance clause. At the time that a $600,000 loss takes place, it is determined that the building is worth $1,250,000. How much will the insurer pay? How much would be paid in the event of a total loss?
Homework Answers
1. The Insurer will pay = Loss * Insured Amount / (Worth of Building * 80%)
The Insurer will pay = 600000 * 900000 / (1250000 * 80%)
The Insurer will pay = $540000
2. In th event of total Loss the insurer will pay = Loss * Insured Amount / (Worth of Building * 80%)
In th event of total Loss the insurer will pay = 900000 * 900000 / (1250000 * 80%)
In th event of total Loss the insurer will pay = $810000
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