Question

You have a building values at $300,000. It is insured for $240,000 value. A covered cause of loss happened and caused $10,000 loss. The policy has a $5,000 deductible. Please calculate the amount payable with the following two scenarios : Scenario 1 : Co-insurance requirement = 80% Scenario 2 : Co-insurance requirement = 90%

Answer 1

	Scenario 1	Scenario 2
Building cost	$        300,000	$   300,000
Insured value (A)	$        240,000	$   240,000
Uncovered (B)		$     30,000	Under 90% clause 90% of value should be insured
Covered cause of loss (C)	$          10,000	$     10,000
Deductable (D)	$            5,000	$        5,000
Co-insurance requirement	80%	90%
Deductable (A)/(A)* (C)-(D) = (E)	$      5,000.00	$ 8,888.89
Payable (E)-(D)	$                   -	$ 3,888.89