Question

A lot is valued at $25,000, and the house is valued at $75,000. If the house is totally destroyed by fire, under a guaranteed replacement cost policy with a coinsurance clause, which of these would MOST likely occur?a. The insurance company would pay $100,000 to the owner.b. The insurance company would pay $75,000 to the owner.c. The insurance company would pay $60,000 to the owner.d. The insurance company would pay $80,000 to the owner.

Answer 1

Option D is correct

Step-by-step explanation:

Co insurance cost is paying 80% of market value of damaged house including property because it is a guaranteed replacement cost policy.

(80/100) * (25000 +75000) = 80000