Question

The Saunders carry a property insurance policy which covers 78% of the replacement cost of their insurable property, valued at $200,000. They have an 85% co-insurance requirement in the policy. If the family incurs a $170,000 loss, what amount will the Saunders recover?

Answer 1

Answer: $156,000

Explanation: An insurance policy is a policy bought from an insurance company against any eventuality or loss. There is an annual payment by the client to the insurance company yearly. There are different types of insurance policy and they include: Burglary, Fire, Accident, Life assurance policy amongst others.

Saunders insurance policy covers 78% of there insurable property valued " $200,000 which was co insured at 85%. Now they incurred $170,000 loss.

Calculating the amount to be recovered thus:

$170,000*78% (replacement cost)

=170,000*0.78

=132,600

132,600/85% (co-insurance)

=132,600/0.85

=156,000