Pls help ASAP on this question (82) A building worth $100,000 is insured for $60,000 under a policy with an 80% co-insurance clause. Fire damages thebuilding to the extent of $90,000. How much would the insurer pay?OA) $48,000.00OB) $50,000.00OC) $60,000.00OD) $67,500.00

Answered: A building worth $100,000 is insured…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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Pls help ASAP on this question (82)

A building worth $100,000 is insured for $60,000 under a policy with an 80% co-insurance clause. Fire damages the
building to the extent of $90,000. How much would the insurer pay?
OA) $48,000.00
OB) $50,000.00
OC) $60,000.00
OD) $67,500.00

Expert Solution

Step 1: Define co-insurance clause

A co-insurance clause is a provision in an insurance policy that needs the insured party to maintain coverage for a fixed percentage of the property's value. If the insured does not maintain coverage at or above the particular percentage, they might be subject to a penalty in the event of a claim. The purpose of the co-insurance clause is to uplift the insured to adequately insure their property and share the risk of loss with the insurance company.

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