Explain how you determined the answer and the calculation used for determining the answer for the following:
A house is valued at $15,000. The owner insured it for $8,000 under a policy containing an 80% coinsurance clause. If a fire should cause a $7,500 loss to the house, how much would the owner receive under his policy?
Answer $5,000
(The 80% coinsurance clause is applied to the value of the property, which $15,000. 80% of $15,000 is $12,000.)
A house is valued at $15,000. The owner insured it for $8,000 under a policy containing an 80% coinsurance clause. If a fire should cause a $7,500 loss to the house, how much would the owner receive under his policy?
Answer $5,000
(The 80% coinsurance clause is applied to the value of the property, which $15,000. 80% of $15,000 is $12,000.)