Question

Find a premium on Property worth 20 500000 Rupees at 3% if (1) the property is fully insured (2) the property is insured for 80% of its value

Answer 1

1)Premium = 615,000 Rupees

2)Premium = 492,000 Rupees

Explanation:

Property worth = 20,500,000 Rupees

Premium rate = 3%

1) the property is fully insured means the property is insured to 100% of its value.

Thus, the insured value = 20,500,000 Rupees

Thus,

the premium = 20,500,000 × 3%

Premium = 615,000 Rupees

2) the property is insured to 80% of its value.

Thus, the insured value = 20,500,000 × 80% Rupees = 16,400,000 Rupees

Thus,

the premium = 16,400,000 × 3%

Premium = 492,000 Rupees