Asked by The Gibson Family on May 11, 2024
Verified
The owner of property valued at $140,000 insured the property for $90,000 for one year at a premium rate of $4.80 per thousand. The policy contained a 90% coinsurance clause. A fire caused $63,000 in damage. How much more did the insurance company pay the property owner for repairs for fire damage than the property owner paid the insurance company in premiums that year?
Coinsurance Clause
An insurance policy clause specifying that, if a property is not insured up to a certain percentage of its value, the owner is the bearer of part of the insurance and will not be covered for the full amount of damages.
Premium Rate
The cost of an insurance policy per unit of coverage, reflecting the likelihood of a claim being made.
- Determine the economic impact of insurance claims by accounting for deductibles, premiums, and coverage thresholds.
- Understand and apply coinsurance clauses to calculate insurance payouts and policyholder responsibilities after a claim.
Verified Answer
RG
Learning Objectives
- Determine the economic impact of insurance claims by accounting for deductibles, premiums, and coverage thresholds.
- Understand and apply coinsurance clauses to calculate insurance payouts and policyholder responsibilities after a claim.
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