How much would be paid for a \$60,000 loss if a commercial building - ProProfs Discuss
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# How much would be paid for a \$60,000 loss if a commercial building valued at \$300,000 is insured for \$200,000 and If the policy is written with an 80% coinsurance percentage and a standard deductible?

Asked by Emma, Last updated: Feb 08, 2024

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#### John Smith

John Smith

Answered Sep 08, 2016

\$49,500-the coinsurance requirement is for the insured to carry 80% of the \$300,000 building value, or \$240,000 of coverage. because the insured only has \$200,000 of coverage, a penalty applies. the formula is that the amount actually carried (\$200,000) is divided by the amount required (\$240,000) to produce a fraction that will be multiplied by the loss. in this case, the fraction is 5/6 and the loss was \$60,000, so the result is a \$50,000 covered loss. however, the standard deductible is \$500 per occurrence, so the net amount paid will be \$49,500.

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