Question

If Carissa Dalton has a $330,000 home insured for $256,000, based on the 80 percent coinsurance provision, how much would the insurance company pay on a claim of $13,500? Assume there is no deductible. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Answer 1

Answer:

$10,472.76

Explanation:

Value of home = $330,000

Value of insurance cover against home = $256,000

Thus, percentage of insurance cover = $256,000/$330,000 = 77.576%

On a claim of any amount against the home, the insurance company will pay, 77.576% share of actual loss, as covered in insurance.

Assuming that the claim amount is the actual loss, incurred, the value of claim approved shall be:

$13,500 $\times$ 77.576% = $10,472.76

That is the actual portion covered in total amount under the insurance.