Revision as of 16:57, 14 May 2023 by Admin (Created page with "A company purchases a commercial insurance policy with a property policy limit of 70,000. The actual value of the property at the time of a loss is 100,000. The insurance poli...")
May 14'23
Exercise
A company purchases a commercial insurance policy with a property policy limit of 70,000. The actual value of the property at the time of a loss is 100,000. The insurance policy has a coinsurance provision of 80% and a 200 deductible, which is applied to the loss before the limit or coinsurance are applied. A storm causes damage in the amount of 20,000.
Calculate the insurance company’s payment.
- 15,840
- 16,000
- 17,300
- 17,325
- 19,800
May 14'23
Key: D
[[math]]
\min \{ 70,000, \frac{70,000}{0.8(100,000)} (20,000 -200)\} = 17,325.
[[/math]]
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