Question

What is the amount payable under a homeowners insurnace policy with the following fact

1) 1% deductible
2) 10,000 loss
3) 150,000 Coverage A limit

Answer 1

The amount payable can be calculated using the coinsurance formula.

Step-by-step explanation:

The amount payable under a homeowners insurance policy can be calculated using the coinsurance formula. The formula is:

Total Loss = (Insurance Coverage Limit) - (Deductible)
Amount Payable = (Insurance Coverage Limit) x (Total Loss/Insurance Coverage Limit)

In this case, with a 1% deductible, a $10,000 loss, and a $150,000 Coverage A limit, the calculation would be:

Total Loss = $150,000 - (0.01 x $150,000) = $150,000 - $1,500 = $148,500
Amount Payable = $150,000 x ($148,500/$150,000) = $148,500

Therefore, the amount payable under the homeowners insurance policy would be $148,500.