Acme Company insured its building on a replacement cost basis for $700,000 under a property insurance...
Acme Company insured its building on a replacement cost basis for $700,000 under a property insurance policy that included an 80% coinsurance clause. The building had a replacement cost of $1,000,000 when it sustained a $40,000 covered loss. How much will Acme Company receive from its insurer, assuming a $5000 deductible applies? A, 40000 B; 30000 C,30625 D. 35000
Homework Answers
Answer:
Correct answer is:
C. 30625
Explanation:
Claim received = Insurance carried / Insurance required * (Loss - Deductible)
= 700000 /(1000000 *80%) * (40000 -5000)
= $30,625
As such option C is correct and other options A, B and D are incorrect.
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Acme Company insured its building on a replacement cost basis
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